Cathie Wood’s Ark Invest Sells Nvidia Stock and Buys This Artificial Intelligence (AI) Growth Stock.

Ark Invest CEO Cathie Wood believes: nvidia (NVDA 0.12%) You may be judged soon. In March she wrote:

Without an explosion in software revenue to justify over-building GPU capacity, we wouldn’t be surprised to see spending halt and excess inventory corrected, especially among cloud customers, who account for more than half of Nvidia’s data center revenue.

That doesn’t mean Nvidia is a bad investment. The company has weathered oversupply in the past, and its stock price has always bounced back. But Ark Invest sees better opportunities elsewhere. So Wood and her team continued to sell Nvidia stock throughout March, redeploying capital into 2019. trading desk (TTD 0.24%)This is another company that can benefit from artificial intelligence.

Here’s what investors need to know about ad tech companies.

The Trade Desk is the leading independent platform for media buyers.

The Trade Desk operates the largest independent demand-side platform, a type of advertising technology software that helps media buyers plan, measure and optimize data-driven campaigns across digital channels. The platform features what executives consider industry-leading artificial intelligence (AI) and measurement capabilities, both of which help media buyers realize greater returns on their advertising spend.

The Trade Desk has a particularly strong presence in two of the fastest-growing advertising channels: connected TV (CTV) and retail media. in fact, Forrester Research We recently revealed that The Trade Desk is dominating CTV advertising space. Morgan Stanley Because of its independent business model and growing list of retail partners, it believes the company “will ultimately become a leader in offsite retail media advertising.”

More specifically, the term independent means that The Trade Desk is not affiliated with any website or mobile app, so there is no reason to direct advertisers to specific inventory. By comparison, alphabetGoogle has built an advertising ecosystem rife with conflicts of interest. It sells ad technology software to third-party media buyers and publishers, while also selling its own inventory on services like Google Search and YouTube.

This means that Google has a clear incentive to drive ad buyers to specific inventory, and the company also competes with its own customers. The result of this conflict is that brands are more willing to share their data with independents like The Trade Desk. The company has taken advantage of these advantages and built powerful AI and measurement capabilities into its platform.

In particular, The Trade Desk sources data from numerous major retailers, creating measurement opportunities not found on other platforms. Our partner lineup includes: walmart, hook, home depot, target, walgreensand Albertsons, all of which are among the world’s top 10 retailers. The unique data provided by these retailers lays the foundation for superior AI. Because data is the limiting factor in training machine learning models.

The Trade Desk gained market share in the fourth quarter.

The Trade Desk reported good results for its fourth quarter. Customer retention remained above 95% for the 10th consecutive year, revenue increased 23% to $606 million, and generally accepted accounting principles (GAAP) net income increased 36% to $0.19 per diluted share. “We have outperformed the rest of the digital advertising space over the past eight quarters,” CEO Jeff Green told analysts. He also said the company is uniquely positioned to continue gaining share not only in 2024 but also into the future.

The Trade Desk launched a new platform called Kokai last June. It features an advanced AI engine that synthesizes signals across 13 million impressions per second to help advertisers buy the right impressions and reach the right audience at the right time. Kokai has also integrated new measurement capabilities that allow advertisers to evaluate retail campaign performance and CTV ad quality.

Ultimately, Kokai should reduce friction for advertisers and improve campaign results. This value proposition will attract more media buyers to The Trade Desk and help the company secure more advertising budgets.

Tradedesk inventory isn’t cheap, but the prices are bearable.

Digital advertising spending is expected to grow 15.5% annually through 2030, but The Trade Desk’s strong presence in fast-growing CTV and retail media channels means it will grow even faster. The company also believes it can accelerate growth in international markets. This is notable because North America currently accounts for 88% of the platform’s advertising spend.

With that in mind, Wall Street analysts expect The Trade Desk to grow its revenue by 20% per year over the next five years. These consensus estimates make the current valuation of 22.4 times sales seem acceptable, although it’s certainly not cheap. Although investors should expect volatility in the near term, The Trade Desk could create significant shareholder value over the long term. Now is a good time to buy a small position in this growth stock.