TTD Declines 25% in the Past 3 Months: How to Play the Stock?

The Trade Desk TTD, a prominent name in the digital ad tech space, continues to face pressure with the stock sliding 25.4% over the past three months. This is an uncomfortable drawdown for a company viewed as one of ad tech’s leading players.

Price Performance

However, the company is not alone in the downturn, underscoring the widespread pressure across the digital advertising ecosystem. The Zacks Internet Services industry is also down 7.7% over the same time frame.

Moreover, the Zacks Computer & Technology sector and the S&P 500 composite have lost 7.1% and 2.5%, respectively.

Looking ahead, the key question for investors is now is whether the recent sell-off represents a buying opportunity?

Let’s examine closely to understand what TTD’s slump represents for investors.

Multiple Tailwinds Strengthen Long-Term Prospects

Even with the recent share-price pressure, several tailwinds continue to support The Trade Desk’s long-term narrative. These include CTV, retail media, AI & Kokai, international growth and supply-chain modernization efforts, including OpenPath. Moreover, The Trade Desk’s strategy revolves around the open Internet, which is where price discovery and competition exist and it continues to expect the open Internet to gain share relative to closed advertising ecosystems.

Increasing digital spending in CTV, particularly for premium content and live sports, is a key growth driver. The transition toward biddable CTV is gaining momentum. The benefits of decision-based buying (like greater flexibility, control and performance) compared with traditional programmatic guaranteed or insertion-order models are rendering it the logical choice for advertisers. CTV continues to be one of the company’s fastest-growing channels. In the fourth quarter of 2025, video, which includes CTV, comprised about half of the company’s business.

Retail media has emerged as one of the fastest-growing areas in the digital advertising space. Management noted that over the past five years, the company has formed partnerships with retailers around the world to build what it describes as the “largest and richest marketplace of retail data” globally. According to management, retailers participating in its data marketplace collectively represent more than half of retail sales worldwide.

The company’s increasing focus on artificial intelligence (“AI”) bodes well. Management views the combination of TTD’s proprietary AI capabilities and platform objectivity as a competitive strength.

Kokai, TTD’s next-generation AI-powered DSP experience, remains central to its AI strategy. Nearly 100% clients now use Kokai as their default experience, and this is strengthening its competitive moat. Citing a real-world example, TTD noted that IKEA reduced cost per acquisition by 17% using Kokai’s AI-driven omnichannel optimization.

Another important highlight was Audience Unlimited, which management described as one of its most significant innovations. Advertisers are wary of third-party data, citing high costs and uncertainty over effectiveness. Audience Unlimited tackles these issues by using AI to rank third-party data segments for campaign relevance, drawing from hundreds of trusted providers. Instead of costly a la carte pricing, advertisers gain access to all relevant data at a simplified, lower inclusive rate, enabling scalable precision targeting without unpredictable costs or reconciliation hassles.

The company’s OpenPath, Deal Desk, and OpenAds initiatives further strengthen its ecosystem by connecting advertisers directly to publishers, improving transparency and supply-chain efficiency.

TTD continues to expand globally, with international markets growing faster than North America. The company noted strong momentum across EMEA and APAC, reflecting multi-year investments in those regions. International business currently represents roughly 16% of total revenues, a clear opportunity for long-term growth.

TTD has strengthened its relationships with key advertisers through Joint Business Plans (JBPs). By the end of 2025, JBPs accounted for more than 50% of the company’s business, and the pipeline had more than doubled year over year, highlighted management.

Moreover, as digital advertising shifts toward AI-driven, outcome-based campaigns, The Trade Desk’s cash strength ($1.3 billion in cash, cash equivalents and short-term investments and no debt) offers a buffer against macro volatility. Investors will also find the expansion of the buyback program to a total of $500 million appealing.

TTD Faces Plenty of Headwinds

Digital advertising spending is prone to macroeconomic fluctuations.  If macro headwinds worsen, revenue growth may face pressure due to reduced programmatic demand.

TTD highlighted soft demand in several important advertising verticals, particularly in consumer packaged goods and automotive.  These categories remained some of the company’s weakest areas in the fourth quarter and remain soft entering 2026.

While The Trade Desk remains a leading independent DSP, the competitive environment is intensifying. Walled gardens like Meta Platforms, Apple, Alphabet GOOGL and Amazon AMZN dominate this space as they control their inventory and first-party user data, allowing for highly targeted ad campaigns. While CTV remains a strong revenue driver, this market is also increasingly becoming competitive as smaller players like Magnite and PubMatic PUBM intensify their efforts. AMZN’s expanding DSP business is giving tough competition to TTD, especially in this space.

Though TTD is focusing on geographic expansion, executing well across disparate markets can be complex and risky. Regulatory and privacy-related changes like the deprecation of cookies and tightening data-privacy laws like Europe’s GDPR also pose ongoing challenges.

TTD is focused on embedding AI across the portfolio, which will further raise capex and operational costs.  The company expects adjusted EBITDA margins in 2026 to remain in line with 2025, as the company continues investing in AI capabilities, product innovation and go-to-market infrastructure.

Although TTD continues to grow, the growth rate has been slowing compared with previous years. While fourth-quarter revenues were up 14%, first-quarter revenues are expected to increase 10%.

TTD’s Discounted Valuation

In terms of forward price/earnings, TTD’s shares are trading at 13.71X, lower than the Internet Services industry’s ratio of 24.88X.

AMZN, PUBM and GOOGL trade at 26.44X, 32.4X and 25.04X, respectively.

Over the past year, Amazon, Alphabet and PubMatic stock prices have lost 8%, 6.8% and 2.9%, respectively.

Conclusion: TTD Is a Hold for Now

Though TTD has several long-term catalysts, such as the rise of CTV, expanding retail media networks and the growing adoption of Kokai, the near-term picture remains muddled by macro uncertainty, rising expenses and intensifying competitive pressure from both walled gardens and independent ad-tech peers

Given the mix of solid fundamentals and near-term headwinds, investors holding TTD stock can retain it in their portfolios for now, but new investors would be better off waiting for a favorable entry point.

At present, TTD carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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