Artificial intelligence (AI) has had a significant positive impact on various sectors, including semiconductors, workplace collaboration software, and cloud computing. Consumers, businesses, and governments are striving to harness this emerging technology to boost productivity. In the digital advertising sector, AI adoption has enhanced the efficiency of audience targeting for advertisers, thereby reducing costs and improving returns on advertising investments. According to Grand View Research, spending on AI tools in digital marketing is projected to soar from $15. 8 billion in 2023 to $82 billion by 2030, reflecting a compound annual growth rate of 26%. This surge in AI utilization is one factor contributing to The Trade Desk (TTD -0. 85%), a provider of programmatic advertising solutions, experiencing substantial revenue and earnings growth in recent quarters, resulting in a remarkable 69% increase in its stock price in 2024. The company is slated to release its third-quarter earnings on November 7, and there is a strong possibility of another better-than-expected report. Here’s why that might happen. Accelerated Growth in 2024 The Trade Desk offers a data-driven programmatic advertising platform that enables brands and advertisers to purchase ad inventory and serve ads in real time to targeted audiences across various platforms including video, connected television, mobile, and social media. The platform automates the ad purchasing and digital marketing processes, leveraging AI to enhance advertisers' returns on their investments. Since 2016, The Trade Desk has incorporated AI into its programmatic ad platform, and last year it advanced this effort with the introduction of Kokai, an AI-driven digital advertising platform. According to the company, this AI tool has led to substantial improvements for advertisers, with Kokai users experiencing an average 36% reduction in cost per click and a 34% reduction in cost per action, which charges advertisers only when specific user actions are completed. Kokai can access over 15 million ad impressions per second, enabling advertisers to optimize their campaigns by purchasing the "right ad impressions at the right price to effectively reach their target audience at optimal times. " As a result, customers who transitioned from the Solimar programmatic ad platform (launched in 2021) to Kokai have realized a remarkable 70% increase in their reach. Management is intensifying Kokai’s integration within its platform to further assist advertisers in maximizing their ad spend returns, likely contributing to the company's improved growth in 2024.

Revenue rose 27% year-over-year in the first half of 2024 to $1. 08 billion, surpassing the 22% growth observed during the same period the previous year. Earnings also increased by 29% in the first half of 2024, reaching $0. 66 per share. The Trade Desk anticipates a minimum of $618 million in revenue for the third quarter, representing a 25% increase from the prior year, and expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow from $200 million in the third quarter of 2023 to $248 million, nearly a 25% increase. However, actual revenue and profit figures may surpass these expectations. Management estimates its total addressable market at $1 trillion, indicating that they are just beginning to tap into a vast opportunity. Notably, the company has maintained a customer retention rate exceeding 95% for the last decade, highlighting the strong loyalty to its platform. With the continuous integration of AI into its services, The Trade Desk stands a good chance of attracting a larger pool of advertisers. Accelerated earnings growth could lead to increased upside Analysts project the company will finish 2024 with earnings of $1. 61 per share, indicating a 28% increase from 2023. Earnings growth is predicted to decelerate to 19% in 2025 before picking up pace again to 24% in 2026.