The Trade Desk, Inc. TTD and Magnite, Inc. MGNI are players in the digital advertising technology space. TTD operates a leading demand-side platform, which aids advertisers in focusing on data-driven advertising. Magnite is a supply-side platform (SSP) that helps publishers manage and sell their ad inventory across various formats like streaming, online video, display and audio. 

Digital advertising spend is expected to be driven by increasing mobile penetration, social media platforms, and programmatic advertising. Per a report from Grand View Research, the global digital advertising market is expected to witness a CAGR of 15.4% from 2025 to 2030. The report further added that digital advertising will continue to be dominated by video as brands understand the effectiveness of visual storytelling.

This uptrend in spending benefits both TTD and MGNI. So, if an investor wants to make a smart buy in digital advertising, which stock stands out?

Let us delve a little deeper into the companies’ strengths and weaknesses to see which is the better stock pick.

The Case for TTD

TTD is benefiting from a significant increase in digital spending in key areas, such as Connected TV (CTV) and retail media. In the fourth quarter of 2024, The Trade Desk reported a record-breaking spend of more than $12 billion on its platform, signaling continued growth in advertiser demand. The Trade Desk also introduced its Ventura Operating System for CTV, designed to drive greater efficiency and transparency in CTV advertising. This operating system enables better data management, allowing TTD to enhance its targeting capabilities, which are crucial as the CTV market expands.

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. 

The Trade Desk is actively simplifying its platform to be more intuitive without compromising sophistication, which should improve client onboarding and retention. At the same time, the company is aggressively integrating AI across all its operations to cater to the evolving needs of its clients amid the AI boom. 

While Kokai is expected to replace Solimar entirely by the end of 2025, TTD currently maintains two platforms, leading to operational difficulties. Any delays in Kokai adoption could impact performance and reduce upsell opportunities. 

Despite strong demand for its ad-buying platform, the company faced challenges from shifting market conditions and competitive pressures. Increasing macroeconomic uncertainty and escalating trade tensions do not augur well for TTD, as these could squeeze ad budgets. The intensely competitive nature of the digital advertising industry, dominated by industry giants like Google and Amazon continues to put pressure on TTD’s market positioning.

The Case for MGNI

Magnite is gaining from robust growth in CTV, with contributions excluding Traffic Acquisition Costs (ex-TAC) from CTV increasing 19% year over year for 2024. For the full year, it generated contribution ex-TAC of $607 million and processed ad spend of over $6 billion. The growth is being driven by increased ad spend and programmatic adoption by leading giants like Walmart, Disney, Fox, Roku, LG, Vizio, Warner, Discovery, and Paramount. 

On the last earnings call, MGNI highlighted Netflix’s NFLX ad ramp as a significant business opportunity. Netflix is focused on expanding its global ad tier and corresponding ad revenues. MGNI expects Netflix to be a key programmatic partner as they boost the rollout of their ad platform in 2025. Given the momentum, MGNI expects contribution ex-TAC growth of over 10% or mid-teens (excluding political) in 2025. 

Strong growth in Live sports is another tailwind. Its expanded deal with Disney now includes live sports, international markets and podcasts, with Disney inventory also integrated into ClearLine. It is also bolstering its international sports business by expanding its partner base with additions of new partners like FIFA and Sky New Zealand. The addition of more generative AI-powered tools in 2025 is expected to expected to drive operational efficiencies and enable new monetization opportunities. 

MGNI’s SpringServe ad server and streaming SSP platform are its main catalysts. As MGNI does not resell inventory, its technology has enabled direct relationships with virtually all major streaming platforms except YouTube, allowing reach to 92 million U.S. and 75 million EMEA households. Moreover, ClearLine and SpringServe are driving MGNI’s agency marketplaces, which are used by firms like GroupM and Horizon. These marketplaces enable end-to-end solutions and more efficient media spend for these agencies. These tools are strategically important for MGNI, creating sticky relationships with agencies and advertisers. The company’s tech stack initiatives have helped it reduce costs per ad request in 2024. For DV+, the costs per ad have reduced by 26%, and for CTV, it has come down by 45%. 

However, as with all firms operating in this space, competitive pressure, especially from tech behemoths, is enormous, along with macroeconomic uncertainty that could threaten ad budgets. Also, MGNI’s DV+ (display, video, and mobile) business underperformed in the fourth quarter of 2024, mainly due to a post-election unusual spending patterns.  Though MGNI added that the business has rebounded across verticals, the volatility can be a concern. Also, its heavy reliance on CTV business increases business risk. Higher expenses could weigh down on profitability. 

Share Performance for TTD & MGNI

Both TTD and MGNI shares have suffered from tech sell-off due to the escalating trade war situation. Over the past three months, MGNI has lost 28.5% while TTD’s decline stands at a staggering 54%. 

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Valuation for TTD & MGNI

Valuation-wise, TTD is overvalued, as suggested by the Value Score of F, while MGNI has a Value Score of B, respectively. 

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In terms of the forward 12-month price/earnings ratio, TTD shares are trading at 28.37X, higher than MGNI’s 12.83X.

How Do Zacks Estimates Compare for TTD & MGNI?

Analysts have significantly revised their earnings estimates downward for TTD’s bottom line.

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While for MGNI, there is no revision. 

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TTD or MGNI: Which is a Smarter Pick?

Currently, MGNI has a Zacks Rank #3 (Hold), making the stock a stronger pick compared with TTD, which has a Zacks Rank #5 (Strong Sell).

Magnite stands out as the smarter pick due to its stronger valuation, diversified partnerships, and expanding CTV footprint with clients like Netflix and Disney. If investors are seeking an AI tech stock with long-term growth potential, MGNI is a better pick. 

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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