The Trade Desk vs. Alphabet: Which Ad-Tech Stock is the Smarter Buy?
Since both firms have a massive exposure to the booming connected TV (CTV) and retail media trends, this makes for an intriguing comparison for investors.
So, which stock makes a better investment pick at present? Let's deep dive into the pros and cons for each company.
The Case for TTD
TTD is confident in its ability to outpace the market and seize future opportunities owing to solid execution across key initiatives, CTV, retail media, international expansion, Kokai, UID2 and OpenPath. The Kokai platform is now being used by two-thirds of the clients, much ahead of schedule. The platform is delivering on lower funnel KPIs, including 24% lower cost per conversion and 20% lower cost per acquisition, per TTD. 100% adoption by clients is expected to be completed by this year's end. The integration of Koa AI tools was highlighted by management as a 'game changer' for the Kokai platform.
It recently introduced Deal Desk, an innovation within its Kokai platform designed to enhance how advertisers and publishers manage one-to-one deals and upfront commitments. The acquisition of Sincera, a leading digital advertising data company, will aid in enhancing its programmatic advertising platform by integrating Sincera's actionable insights on data quality. It recently unveiled the OpenSincera application to offer Sincera's rich advertising metadata to the ad tech ecosystem.
First-quarter revenues jumped 25% year over year while adjusted EBITDA was $208 million (34% margin). Video, which includes connected TV or CTV, represented a high 40 percent share of digital spend, while mobile had a mid-30 percent share. It expects at least $682 million in revenues for the second quarter of 2025, implying approximately 17% year-over-year growth. The stock's recent addition to the S&P 500 index has increased its visibility and potentially aided in attracting more institutional ownership.
Nonetheless, increasing macroeconomic uncertainty and escalating trade tensions do not augur well for TTD, as these could squeeze ad budgets. The company highlighted the impact of the volatile macro backdrop, particularly on the large global brands. If macro headwinds worsen or persist into the second half of 2025, revenue growth may face further pressure due to reduced programmatic demand. The intensely competitive nature of the digital advertising industry, dominated by industry giants like Alphabet and Amazon, continues to put pressure on TTD's market position.
While CTV remains a strong revenue driver, the market is increasingly fragmented and competitive. Heavy reliance on CTV for growth is a concern, as any adverse impact on this segment could weigh heavily on the company's overall performance. Moreover, TTD derived 88% of its revenues from North America, while only 12% came from international markets. A weak international footprint limits TTD's total addressable market expansion potential.
The Case for GOOGL
Alphabet dominates digital ad space with its online ad platform. The main sources of its ad revenues are Google Search, YouTube ads, Google Network, Google AdSense and Google Ad Manager. The company's ginormous ad technology infrastructure integrates both DSP and supply-side platforms, aids advertisers in reaching their target across the web, mobile apps, and CTV.
Alphabet's efforts to infuse AI in Search are driving top-line growth. Circle to Search now features AI Mode. AI Mode is also accessible through Lens within the Google app on both Android and iOS devices. Circle to Search is now available on 300 million-plus Android devices. Earlier, Alphabet announced the launch of Offerwall. It is a flexible tool designed to aid publishers earn revenue while offering their audience choices. Offerwall is now available in Ad Manager. The company also rolled out new features, which include Optimize. Optimize utilizes AI to decide the best time to display the Offerwall for each visitor, thereby maximizing engagement and revenues.
In 2024, Google advertising revenues increased 11.2% over 2023 to $264.59 billion, driven by a 13.2% increase in Google Search & other revenues and a 14.7% increase in YouTube ads. In 2024, ad revenues accounted for 75.6% of the total revenues. In the first quarter of 2025, Google advertising revenues rose 8.5% year over year to $66.885 billion and accounted for 74.1% of total revenues. Search and other revenues were up 9.8% and YouTube's advertising revenues improved 10.3% year over year.
Alphabet's ad business faces several headwinds. Regulatory scrutiny is intensifying, particularly in the United States and Europe. The landscape has become increasingly competitive with both small and established players aggressively vying for ad dollars. Privacy changes such as the depreciation of third-party cookies and Apple's iOS tracking restrictions are also reforming the digital ad landscape.
Nonetheless, business diversification, especially cloud and AI, with stupendous financial resources, gives it an edge and reduces reliance on one segment. Alphabet generated $36.15 billion of cash from operations in the first quarter of 2025. Cash equivalents and marketable securities were $95.328 billion at the quarter-end.
Share Performance for TTD & GOOGL
Over the past month, TTD and GOOGL have gained 13.7% and 14.8%, respectively.
Image Source: Zacks Investment Research
Valuation for TTD & GOOGL
Valuation-wise, TTD is overvalued, as suggested by the Value Score of F, while GOOGL has a Value Score of C.
In terms of the forward 12-month price/earnings ratio, TTD shares are trading at 41.06X, higher than GOOGL's 19.35X.
Image Source: Zacks Investment Research
How Do Zacks Estimates Compare for TTD & GOOGL?
Analysts have made no revisions for TTD's bottom line for the current year in the past 60 days.
Image Source: Zacks Investment Research
For GOOGL, there is a marginal upward revision.
Image Source: Zacks Investment Research
TTD or GOOGL: Which Is a Better Pick?
TTD and GOOGL currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
While both The Trade Desk and Alphabet are benefiting from the rise in CTV and retail media, Alphabet stands out due to its broader ad ecosystem, stronger financials, and diversified revenue streams. Its massive scale, robust AI integration, and better valuation make it a more resilient long-term investment.
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