The advertising technology, or adtech, industry uses software and AI to help advertisers buy ads more efficiently and help publishers monetize content. As digital advertising expands across mobile, streaming, and connected TV, these tools are becoming more important. Industry forecasts suggest the global adtech market could grow from about $1.1 trillion in 2026 to more than $3 trillion by the next decade.
For investors, that growth is drawing attention to companies building the infrastructure behind digital ads. Here are some of our favorites.
Top adtech stocks to consider
1. The Trade Desk
NASDAQ: TTD
Key Data Points
2. PubMatic
NASDAQ: PUBM
Key Data Points
3. Magnite
NASDAQ: MGNI
Key Data Points
4. Digital Turbine
5. DoubleVerify
How to invest in adtech stocks
If you think you're ready to start investing in adtech stocks, there are a few basic steps you must take.
- Open your brokerage app: Log in to your brokerage account where you handle your investments. If you don't have one yet, take a look at our favorite brokers and trading platforms to find the right one for you.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Benefits and risks of investing in advertising technology stocks
Before deciding whether adtech stocks are a good fit for your portfolio, it's critial to familiarize yourselves with the benefits and risks.
Benefits
- Since the adtech industry is expected to flourish in the coming years, adtech stocks will appeal to growth investors.
- Investing goals may vary, but portfolio diversification is an essential element of any portfolio, and adtech stocks could help achieve this.
- Adtech companies often help businesses grow sales.
Risks
- If the economy downturns, businesses may be inclined to reduce their marketing budgets, hindering the presumed growth of adtech companies.
- Artificial intelligence (AI) and machine learning technologies are growing rapidly, and if adtech companies don't stay up to date, their platforms may become antiquated. Consequently, they may have to invest heavily in research and development, thereby reducing profits.
- Many adtech companies are making substantial reinvestments in their businesses rather than returning capital to shareholders through dividends, so those looking to generate passive income have limited options with adtech stocks.
The bottom line
Before picking up shares of an adtech stock, investors will want to identify the specific exposure they're interested in. Those eager to gain exposure to the connected TV market, for example, will find The Trade Desk to be a solid choice, while those looking for exposure to the wireless carrier market will find Digital Turbine more appealing.
Secondly, those who are more risk-averse will want to prioritize companies that generate free cash flow, since the ability to generate cash organically is a sign of good financial health. In this regard, The Trade Desk stands out among its peers, producing strong, consistent free cash flow over the past few years.
Related investing topics
FAQ
Investing in adtech stocks FAQ
About the Author
Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DoubleVerify, PubMatic, Roku, and The Trade Desk. The Motley Fool recommends Magnite and Verizon Communications. The Motley Fool has a disclosure policy.
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