TLDR
- TTD shares dropped 5% following its Q4 2025 results, even though it exceeded earnings expectations, due to lackluster Q1 2026 guidance of $678 million (a mere 10% growth)
- On Friday, Wedbush downgraded TTD to “underperform,” keeping its $23 price target—which indicates around 22.8% downside
- This downgrade came after an 18% one-day surge driven by reports of a rumored collaboration with OpenAI
- Wedbush cautions that the excitement around the OpenAI deal is exaggerated and that OpenAI will probably develop its own advertising platform over time
- TTD’s 2025 revenue rose 18% to $2.9 billion—down from 26% growth in 2024—as Amazon’s advertising business eroded its market share
The Trade Desk’s challenging period became slightly more difficult on Friday. The stock—which had already shed 66% of its value over the past year—jumped 18% on Thursday after The Information reported a rumored partnership with OpenAI. Then Wedbush intervened.
The research firm cut TTD’s rating from “neutral” to “underperform,” maintaining its $23 price target. With the stock now trading near $29.80, this suggests approximately 22.8% downside from current levels.
Wedbush recognized that the OpenAI deal is a “critical long-term strategic move” for TTD, especially as a defense against AI search cannibalization. However, it contended that the market’s reaction outpaced reality.
The firm warned that as OpenAI scales, it will likely develop its own in-house demand-side platform (DSP) to capture ad revenue that currently goes to third parties like TTD. It also noted that as OpenAI opens its inventory to more DSP partners, TTD’s win rates will experience “natural compression.”
“We don’t anticipate TTD’s revenue to grow in tandem with the expansion of OpenAI’s product,” Wedbush stated.
A Business Already Under Pressure
Prior to Thursday’s OpenAI-driven uptick, TTD had been declining gradually for months. The company’s Q4 2025 results, released on February 25, surpassed expectations—but the guidance was an issue.
2025 revenue increased 18% to $2.9 billion, a decrease from the 26% growth seen in 2024. Earnings per share came in at $1.77, rising only 6.6% year-over-year.
The company projected Q1 2026 revenue of $678 million, reflecting just 10% growth. This figure disappointed investors and led to an initial 5% drop in the stock after earnings.
Amazon has been a major source of pressure. Its advertising revenue reached $21.3 billion in Q4 2025, up 23%—outpacing TTD’s 14% quarterly revenue growth. TTD’s management has cited an excess of ad supply in the market last year as a factor that impacted margins.
TTD’s Case for the Defense
TTD isn’t giving up easily. During its earnings call, management referenced a case study in which a major appliance brand directly compared its platform with Amazon’s DSP.
The results showed that TTD reached 70% more unique households, at a 30% lower total cost, with campaign performance six times better than Amazon’s platform.
The reasoning is that TTD’s neutrality—since it doesn’t own ad inventory like Amazon does—enables advertisers to reach a broader audience across the open internet.
The programmatic advertising market was worth $833 billion in 2024 and is expected to reach $4.4 trillion by 2032, growing at approximately 23% per year.
The stock currently trades at around 4 times sales, a discount compared to the U.S. tech sector average of 8.3x. The 12-month median analyst price target is $32, indicating 34% upside from current levels—though Wedbush’s $23 target is well below this consensus.
Following the Wedbush downgrade, TTD stock was down over 2% in premarket trading on Friday.
