We recently published a list of 11 Best AdTech Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Criteo S.A. (NASDAQ:CRTO) stands against the other best Adtech stocks to buy.
As per Dimension Market Research, the Global AdTech market size touched US$1,066.8 billion in 2023 and should reach US$3,528.4 billion by 2032. The market is expected to compound at ~14.2% from 2024 to 2032. Some of the critical trends include a strong emphasis on privacy-centric advertising, growth fueled by AI-driven personalization, and dominance of video and mobile advertising.
Artificial Intelligence and Machine Learning continue to drive sophisticated audience segmentation and personalized ad experiences. As per Geomotiv, a software development company, these technologies can quickly analyze vast amounts of data, predict user behavior, and tailor ads in real time. Collectively, these features help to improve engagement and conversion rates. The benefits of personalization and the opportunities provided should drive the demand for these solutions and the growth of AI-oriented AdTech companies.
Market experts believe that advertisers continue to target Programmatic advertising. This space continues to expand beyond traditional digital channels. Adnimation, a software company, highlighted that CTV ad spending is expected to grow to $42.4 billion by 2027 in the US. Publishers that have video content should prioritize CTV and find for best supply-side platform (SSP) to tap into a rapidly growing market.
Advertisers have been leveraging programmatic to reach the audiences with targeted ads. Furthermore, programmatic continues to make inroads into the audio format, such as podcasts and music streaming services. Next, AdTech SaaS companies have been providing customizable solutions, which enable advertisers to tailor the tools and features as per the specific needs. The popularity of these products continues to grow among advertisers and publishers.
As per Adnimation, data-driven influencer marketing is expected to dominate the broader AdTech market. Furthermore, the publishers and their AdTech counterparts continue collaborating with micro-influencers to fuel engagement and conversions. Blockchain technology should also be key in ensuring transparency in digital ad transactions. By decentralizing ad transactions, blockchain can help reduce ad fraud, improve trust between publishers and advertisers, and enable accurate tracking of ad performance. This will result in more reliable revenue streams. Adnimation also believes that, by 2025, video is expected to dominate digital ad formats, making up 82% of all internet traffic.
To list the 11 Best AdTech Stocks to Buy According to Hedge Funds, we scanned through online rankings and AdTech-focused ETFs. After getting the initial list of 20-25 stocks, we shortlisted the ones having high hedge fund holdings. Finally, the shortlisted stocks were arranged in ascending order of their hedge fund sentiment, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A graphic designer in front of a computer rendering a cutting edge digital advertisement for the company.
Number of Hedge Fund Holders: 21
Criteo S.A. (NASDAQ:CRTO) is a global technology company that specializes in digital advertising and commerce media solutions. It supports businesses in reaching and engaging their target audiences, driving sales, and measuring the effectiveness of their campaigns.
Criteo S.A. (NASDAQ:CRTO)’s focus on becoming a comprehensive Commerce Media platform sets it apart from the broader AdTech sector. J.P. Morgan analyst Doug Anmuth believes that Criteo S.A. (NASDAQ:CRTO) continues to experience healthy growth in the Retail Media sector, with expectations that the addressable market should touch ~$50 billion by 2027. As per the analyst, the company remains focused on enhancing its offerings, which should fuel future demand and supply-side growth.
Criteo S.A. (NASDAQ:CRTO)’s strategic initiatives, which include leveraging AI throughout its ad stack and expanding inventory and client base, should drive its long-term growth. It offers solutions that unify access to ~225 retailers. This approach enables the company to complement major players such as Amazon in the retail media space. It addresses the fragmentation issue that many advertisers face when they try to reach consumers across multiple platforms.
With more and more retailers recognizing the value of monetizing digital properties, Criteo S.A. (NASDAQ:CRTO)’s solutions should see higher adoption. Also, the postponement of Google Chrome’s cookie deprecation until 2025 is expected to benefit Criteo S.A. (NASDAQ:CRTO) by providing additional time to adapt to a cookie-less advertising environment while continuing to garner revenue from the current business model.
ClearBridge Investments, an investment management company, released its Q2 2024 investor letter. Hereis what the fund said:
“New positions in the quarter were from a variety of sectors. Criteo S.A. (NASDAQ:CRTO), in the communication services sector, provides digital advertising technologies that help drive clients’ e-commerce businesses. While the company was previously reliant on third-party cookies to help optimize its products, management has spent the past five years pivoting away from this technology and focusing on building a leading presence in the burgeoning retail media space. We believe this transformation has reached a tipping point, and that the inherent growth opportunities in this new end market represent a higher growth rate than is currently reflected in the company’s valuation.”
Overall, CRTO ranks 7th on our list of best AdTech stocks to buy according to hedge funds. While we acknowledge the potential of CRTO as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than CRTO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
