AI Advertising Stocks for Growth in 2025 News ad

Advertising is an ancient industry that is still developing at a rapid pace to this day. GroupM, a market research company, predicts that global advertising revenue will grow by almost 10% in 2024. What’s more, it projects total revenue to cross the $1 trillion mark this year. A key factor driving the rapid growth of this mature industry is innovation. Using AI is the success story of 2024 in advertising. Below, I’ll detail three AI stocks that investors can use to benefit from this trillion-dollar industry.

Meta: The Dominant Advertising Ecosystem Driven by Artificial Intelligence

Metaplatforms today

$585.25 -10.32 (-1.73%)

(As of 12/20/2024 5:45 PM ET)

52 week range

$340.01

▼

$638.40

Dividend yield

0.34%

P/E ratio

27.57

Target price

$638.00

Meta platforms NASDAQ: META is a great example of combining artificial intelligence and advertising. The tech giant controls the huge social networks Facebook and Instagram. They have a lot of data about these users. The company can target users with personalized ads by feeding that data into artificial intelligence algorithms. This creates an extremely valuable platform for merchants to buy advertising on, increasing demand for space on these apps. This has allowed Meta to dramatically accelerate its ad revenue growth over the past 12 months to more than 20%. This also significantly increased profits in this segment.

Data from eMarketer shows an important indicator of Meta’s dominance in this space and why it may continue. Meta’s digital platforms had almost the same market share as Alphabet. NASDAQ: GOOGLE YouTube in 2024 when it comes to where American adults spend their time online. Each platform accounts for about 7.5% of time spent on digital platforms.

However, in terms of market share of digital ad spend, Meta platforms account for more than 21.3%. This is almost four times higher than YouTube (5.6%). While people spend similar amounts of time on these platforms, advertisers are willing to spend much more in the Meta environment. This is likely due to the better personalization that Meta offers advertisers. This means that money spent on advertising results in relatively greater business success.

AppLovin: Use AI to Increase Downloads for Gaming Companies

AppLovin today

US$340.99 +22.25 (+6.98%)

(As of 12/20/2024 5:45 PM ET)

52 week range

$37.40

▼

$417.64

P/E ratio

103.33

Target price

$310.71

AppLovin NASDAQ: APP uses artificial intelligence to help mobile game developers maximize the effectiveness of their advertising spend. This helps them identify the best places to advertise, which will lead to the maximum number of people downloading their game. It also aims to attract people to make purchases from these games. These app developers were willing to pay a pretty penny to use the AppLovin software. AppLovin’s sales growth exceeded 60% in each of the last five quarters compared to the prior year quarter.

The company is also seeing each customer pay more, with average monthly revenue per customer up 13% last quarter. AppLovin’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) are growing significantly faster than its revenue, indicating strong profitability growth.

In 2025 and beyond, AppLovin is targeting other industries that it can help with its technology. This includes the e-commerce industry, which it is already tiptoeing into. This represents a huge opportunity. Despite growth of 478% in 2024 as of the December 17 close, analysts still see significant room for growth. The average of four price targets released in December suggests a 36% upside potential for the stock.

The Trade Desk: Focus on connected TV is a differentiator

Trading department today

$125.01 -1.22 (-0.97%)

(As of 12/20/2024 5:31 PM ET)

52 week range

$61.47

▼

US$141.53

P/E ratio

204.93

Target price

$127.07

Trade department NASDAQ: TTD is another player making waves in the advertising space. The company operates an ad buying platform that helps ad agencies and advertisers choose the best places to spend. The company’s experience covers a wide range of advertising channels. This includes video and music streaming platforms, websites, digital billboards and social media. The company’s Koa AI Engine helps recommend the best ad placements and optimize the budgets available to clients.

The company’s revenue growth is consistently high. Year-over-year sales growth has exceeded 20% every quarter since the third quarter of 2020. Spending on The Trade Desk platform is highly diversified across industries. This contributes to the stability of the company’s income.

The company’s strong focus on connected TV and streaming advertising is a growth driver that could boost its value. The company’s assertion that future funding for streaming services will be based on advertising is poignant. Netflix NASDAQ: NFLX the introduction of an ad-supported layer reinforces this idea. Analysts predict that revenue from streaming services will continue to take market share from traditional television, growing by 20% in 2025.

Before you consider Trade Desk, you should hear this.

MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and The Trade Desk wasn’t on the list.

While Trade Desk currently has a Moderate Buy analyst rating, the top-rated analysts think these five stocks are Strong Buys.

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