Better AdTech Stock: AppLovin vs. The Trade Desk

With people constantly connected to media content, every click on a mobile app or view of a streaming video holds the potential to be monetized. This is the battleground of advertising technology (adtech), representing a total addressable market approaching $1 trillion.

Companies like AppLovin (NASDAQ: APP) and The Trade Desk (NASDAQ: TTD) empower brands and publishers to capitalize on the interactions of their audiences.

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However, despite exceptional growth, shares of the two industry leaders have been highly volatile at the start of 2025 amid the broader stock market correction. AppLovin shares are down 45% from their 52-week high, while The Trade Desk stock is down by 53% year to date.

Is it time to buy the dip, or should investors keep scrolling? Let's discuss which adtech titan is the better stock right now.

Image source: Getty Images.

The case for AppLovin

AppLovin excels in mobile adtech, capturing strong demand from gaming app developers seeking to generate revenue from user activity.

At the heart of this ecosystem is the AppLovin Exchange, which serves as a real-time bidding platform connecting app publishers with advertisers to buy and sell ad inventory at scale. The company's breakthrough has been its ability to integrate artificial intelligence (AI) tools through its AXON 2.0 engine, which sorts vast amounts of information to optimize ad placements and enhance conversions.

For the year ended Dec. 31, 2024, advertising revenue surged by 75% year over year, showcasing the transformative impact of AI. More impressive was the shift in profitability as net income soared 343% compared to the prior year. For 2025, consensus estimates project revenue to grow by a solid 21% this year alongside an estimated 69% increase in earnings per share (EPS) to $7.65.

A key strategy for AppLovin this year is to leverage its AXON AI engine and ad marketplace into new advertising verticals such as e-commerce and connected TV (CTV), which includes video streaming channels. The move marks a big jump for AppLovin as it attempts to diversify beyond gaming and goes head-to-head with The Trade Desk in key segments.

Investors convinced AppLovin can replicate its mobile AI leadership in new advertising categories may see it as the top adtech stock.

The case for The Trade Desk

Unlike AppLovin's exchange, which supports app publishers in selling ad space, The Trade Desk focuses more on buyers -- including major brands like Coca-Cola, and advertising agencies such as Omnicom. By this measure, The Trade Desk's advantage is its scale and close relationship with these major enterprises, including partnerships with CTV companies like Walt Disney and Netflix, bolstering its competitive position.

In 2024, The Trade Desk's revenue climbed by 26% while adjusted earnings per share (EPS) grew by a robust 32% compared to 2023. Yet, the results disappointed even loftier Wall Street estimates that expected a bit more from the company's Kokai AI initiative, adding to concerns that AppLovin's entry into the CTV market could pressure its long-held dominance in programmatic streaming ads. These factors help explain its sharp stock price sell-off.

The silver lining is that The Trade Desk's valuation has also pulled back to a more compelling level. The stock is trading at 9 times the company's consensus 2025 revenue as a forward price-to-sales (P/S) ratio, notably well below AppLovin at closer to 17. Similarly, The Trade Desk's forward price-to-earnings (P/E) ratio of 30 represents a discount to AppLovin at 36.

Investors who believe The Trade Desk has a superior technology platform in CTV advertising and that its recent stumble is temporary may think its stock offers better value.

TTD PS Ratio (Forward) data by YCharts

The verdict: Smitten with AppLovin

Choosing between AppLovin and The Trade Desk presents a challenge, as I believe both stocks are well-positioned to rebound and reward shareholders over the long run. That said, I'll give an edge to AppLovin as the better adtech stock right now given its stronger growth momentum, in what may still be the early stages of a global expansion opportunity. I predict AppLovin will outperform moving forward and could be a great option for investors within a diversified portfolio.

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Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AppLovin, Netflix, The Trade Desk, and Walt Disney. The Motley Fool has a disclosure policy.