Diverging Views on The Trade Desk’s Path Forward

As The Trade Desk prepares to release its quarterly earnings, a clear consensus among market analysts is notably absent. The investment community is split, with some highlighting competitive threats and near-term headwinds, while others point to strategic execution and a more compelling valuation following a significant share price decline. The central debate revolves around whether the company's digital advertising model faces structural pressure or is merely navigating a transitional phase.

More optimistic assessments have emerged recently, providing some upward momentum. On January 12, the research firm MoffettNathanson upgraded its rating on the stock from "Sell" to "Neutral," assigning a price target of $39. Analysts there acknowledged persistent structural risks but argued that the steep decline in share price has resulted in a more balanced valuation, improving the overall risk-reward profile.

A decidedly bullish stance comes from Cannonball Research, which recently reaffirmed its "Buy" rating with a $70 price target. Their optimism is partly rooted in the operational success of OpenPath, The Trade Desk's direct-to-publisher product. By the third quarter of fiscal 2025, OpenPath was contributing approximately 10% to total company revenue. Cannonball views this as evidence that the strategy of removing intermediaries and connecting directly with major premium publishers like Disney and Spotify is effective. This approach, aimed at reducing friction in ad delivery and granting publishers more control, is seen as strengthening The Trade Desk's ecosystem position, especially as traditional third-party cookies decline in relevance.

Even some cautious firms see long-term potential. Stifel maintained its "Buy" rating, though it significantly reduced its price target from $90 to $74. The firm continues to label The Trade Desk a "top pick" for 2026, tempering near-term expectations due to challenging year-over-year comparisons and an internal restructuring that may shift revenue recognition timing. Stifel anticipates these factors will diminish in importance later in the year, aided by major events like the FIFA World Cup.

The Bear Case: Mounting Competitive and Technological Pressures

This optimism is countered by a more cautious narrative, which triggered share price weakness on Friday. Citizens JMP downgraded the stock from "Market Outperform" to "Market Perform" and removed its price target, signaling a belief that significant near-term upside is limited.

The downgrade was primarily justified by a shifting competitive landscape. Amazon is aggressively expanding its advertising business, leveraging its data advantages within its closed "walled garden" ecosystem. According to Citizens JMP, Amazon is also employing a highly aggressive pricing strategy with fees starting around 1%, which could undermine The Trade Desk's historical structural strengths.

A technological threat adds to the concern. Analysts suggest generative artificial intelligence (AI) may lower the switching costs between different Demand-Side Platforms (DSPs). If it becomes easier and cheaper for advertising clients to change platforms, premium-focused providers like The Trade Desk could face increased pressure to continuously prove their added value.

Should investors sell immediately? Or is it worth buying The Trade Desk?

Technical Position and the Forthcoming Catalyst

Amid these conflicting narratives, the stock price slipped slightly on Friday, closing at $36.55. Following a dramatic 68% decline over the past twelve months, shares remain well below their previous highs.

From a technical perspective, the stock is currently trading just above a key support zone in the $34 to $36 range. While the closing price sits above the 50-day moving average of $35.20, it remains substantially below the 200-day moving average of $48.53, underscoring a weakened medium-term trend despite some recent short-term stabilization.

The next major test arrives on February 18, 2026, when The Trade Desk reports fourth-quarter results. Key focuses will be management's commentary on early-year pressures, specifically the "tough comps" for Q1 2026 and the impact of Amazon's competition on client retention and budgets.

The company's ability to alleviate market share concerns may hinge on its new AI platform, Kokai. Confirming high client retention rates above 95% while demonstrating progress with products like OpenPath would bolster the arguments of optimistic analysts. Conversely, a lack of positive signals combined with intensifying price competition could validate the more skeptical outlook.

Summary of Key Analyst Arguments:

• Cautious Perspectives:

  • Growing competition from Amazon, with superior data and aggressive pricing.
  • Potential erosion of DSP switching barriers due to generative AI.
  • Near-term guidance risks from difficult comparisons and restructuring, as noted by Stifel.

• Optimistic Perspectives:

  • Valuation is more attractive after the sharp sell-off, improving the risk-reward balance (MoffettNathanson).
  • Strategic product OpenPath now drives about 10% of revenue, supporting the long-term thesis.
  • Firms like Stifel and Cannonball see intact long-term potential despite short-term clouds.