AppLovin vs. The Trade Desk: Wall Street Experts Overwhelmingly Favor One AdTech Stock
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AppLovin (APP +2.23%) and The Trade Desk (TTD +1.62%) are two of the biggest adtech stocks in the market. The last six months, however, have been tough for both stocks. AppLovin is down 20% over the last half year, and The Trade Desk is down 55%. After the considerable sell-off in both stocks, analysts see opportunities for them to bounce back; both have median price targets well above their current share prices. AppLovin's median price target of $660 sits 39% above its stock price as of this writing.
The Trade Desk's median price target of $30 is 34% above its current stock price. But the sentiment on each stock is vastly different, showing a clear preference for one company over the other. Image source: The Motley Fool. Looking beyond the price targets The key difference in analysts' ratings is how many rate each stock as a buy (or its equivalent) versus how many rate each stock a hold or sell (or its equivalent). Sell-side analysts are generally an optimistic bunch. So it's not uncommon for the majority of analyst ratings to be a buy. AppLovin sports 30 buy ratings and five hold ratings.
The Trade Desk, on the other hand, has 21 buy ratings, 19 hold ratings, and 3 sell ratings. That difference is key, as it indicates analysts' belief that one company is well positioned to grow while the other might not be worth buying, even at a good price.
The Trade Desk has experienced a sharp slowdown in growth over the last few quarters. Its challenges started with the transition to its AI-focused Kokai platform. Several setbacks led to underperformance in sales, and growth never recovered. Even with 100% of clients now using the platform, The Trade Desk's revenue growth came in at 14% in the fourth quarter, down from 22% the year prior. What's more, net income margin declined last year, as it faced increased competition from Amazon and other big tech companies. ExpandNASDAQ: TTDThe Trade DeskToday's Change(1.62%) $0.38Current Price$23.57Key Data PointsMarket Cap$11BDay's Range$23.21 - $23.6752wk Range$19.74 - $91.45Volume420KAvg Vol20MGross Margin78.63% The challenges for The Trade Desk keep coming, too. Agencies are pushing back on its fees, arguing that the new programmatic ad-buying platform is full of hidden fees and overall opaque pricing. Rising competition means agencies have more leverage to pressure The Trade Desk to offer better pricing. AppLovin takes a different pricing approach than The Trade Desk. It earns a performance fee on ad conversions, so it only gets paid when the ads work. In order to work with AppLovin, though, advertisers must turn everything over to its algorithmic ad optimizer, Axon 2. That stands in stark contrast to The Trade Desk's offering, which allows advertisers to tweak practically every campaign detail. Advertisers have been happy to hand over their campaigns to the algorithm, though, leaning on AppLovin's data advantage. Sales climbed 70% year over year in 2025, nearly as fast as in 2024. ExpandNASDAQ: APPAppLovinToday's Change(2.23%) $10.53Current Price$483.71Key Data PointsMarket Cap$160BDay's Range$468.50 - $484.4952wk Range$246.00 - $745.61Volume3.4MAvg Vol5.9MGross Margin85.47% AppLovin's growth is primarily constrained by its ability to onboard new advertisers. With limited ad selection, the algorithm often serves suboptimal ads to users. With more ads to choose from, the algorithm can achieve higher conversion rates, increasing the revenue AppLovin generates per ad impression. Management argues it doesn't need to expand its ad supply to grow revenue; it just needs to get the right ads on its platform to show consumers. As a result, it should be able to keep growing rapidly for some time as it invests in onboarding and continued improvements to its algorithm. Paying up for quality AppLovin is in a far better position to grow long term, but investors will have to pay a premium for the stock. Shares currently trade at around 20 times 2026 expected sales. By comparison, The Trade Desk's stock is priced at just 3.3 times sales expectations. Both companies have small market shares in digital advertising, but AppLovin is currently gaining share, and that doesn't appear to be changing anytime soon. What's more, it's exhibiting operating leverage as it scales, with the biggest costs coming from developing its ad optimization algorithm and onboarding new customers.
The Trade Desk has attempted to differentiate itself by offering an alternative to so-called walled gardens. You can advertise across a host of properties with The Trade Desk, not just those owned and operated by the advertising platform you're working with. That comes with a premium price, however.
The Trade Desk's recent financial results show that fewer and fewer advertisers are finding that premium worthwhile in the age of AI-optimized campaigns. That's where AppLovin is flourishing. So, while AppLovin is priced considerably higher than The Trade Desk, analysts still think it's worth paying for. At 20x sales, nobody's calling this a bargain bin find. But analysts seem to bet that paying up for a company firing on all cylinders beats buying a discount ticket to a turnaround that may never arrive. And while the valuation for The Trade Desk is attractive, the business is struggling in the face of competition, so it's best to avoid it for now.