Rose Celine Investments
Equity Investor
The Trade Desk's neutrality remains an advantage over Amazon and Google, which both sell inventory and help decide where advertisers spend. Many brands, especially those competing with Amazon, don't trust it with their customer data, clean room or not. Retention above 95% for over a decade argues against claims that Trade Desk delivers worse return on ad spend, though that debate will be settled in time. x.com x.com x.comÂ
The Trade Desk may be a good business in a bad period that the market is pricing as permanently broken. Far below 60x earnings, it no longer needs perfection. Q2 revenue grew just 3% and management admitted poor execution alongside auto and CPG budget cuts. Yet retention stays above 95%, CTV and audio grew double digits, EMEA and APAC are up almost 30% this year, and advertisers outside the top 500 grew over 50%. CEO Jeff Green bought about $150M of stock; leadership turnover is a concern. x.com x.com x.comÂ
Amazon should thrive as shopping agents spread, because agents seek the best product at the lowest price delivered fastest, and Amazon leads on assortment, prices and fulfillment. It blocks outside agents today, but CEO Andy Jassy has signaled integrations will come; Amazon is building its own agents first and must protect its large ad and sponsored-listing business while it works out agent monetization. Once it opens up, Amazon should over-index in agent-driven market share. x.com x.comÂ
Amazon's accelerating AWS growth at high margins shows the strength of its moat, but returns on heavy capex remain unproven. AWS grew 39% to $46B, its fastest growth in nearly five years, at a 38.7% operating margin; Amazon posted record operating income. Online stores grew 2%, while ads grew 11%, down from 26% last quarter. Trailing free cash flow fell to -$42.4B as net capex reached $210.7B. Returns on about $220B of planned 2026 capex remain the open question, with free cash flow the test. … Show more
The Trade Desk is vulnerable because Amazon has a comparable ad platform and a habit of ruthlessly eating competitors, a bigger concern than AI disruption. Its gross profit versus opex picture looks far weaker than AppLovin's, so its trajectory inspires much less confidence. x.comÂ
Amazon's block of Meta's Muse shopping agent protects its ad business but risks teaching shoppers that agents work fine without Amazon. An agent skips the search page where ad money is made; ads did $19.8B last quarter, up 26%, and likely hold most of the margin outside AWS. Every week Walmart, Best Buy and Wayfair are Muse's default answers adds to the risk. A deal is unlikely until Amazon's own agent stalls, and would then be an ad revenue share; lost volume can't show up yet. x.com x.comÂ
Alphabet's core Search growth is slowing while AI spending surges, making the selloff look deserved despite fast Cloud growth. Search growth fell from 19% to 17% to 12% over three quarters; Search now represents just under half of revenue. The stock could fall to $250, though Amazon is the preferred buy. x.com x.com x.com x.com x.comÂ
The Trade Desk's story broke when its CEO said it wasn't competing with Amazon because it was the open internet, a clear sign of denial. Advertisers spend for return on investment and care about little else. x.comÂ
Meta's core advertising business is significantly outgrowing its biggest competitors even before factoring in the newer businesses it is building. Q3 ad revenue rose 26% year over year, versus 10.6% at Alphabet and 10.9% at Amazon. Back at 19x forward earnings, Meta is the most undervalued Magnificent Seven stock. x.com x.comÂ
The Trade Desk's short-term upside from ChatGPT monetization is undervalued as OpenAI moves to ads. At $22, down from $139, it is priced for distress or disruption even though the business seems to be doing okay, leaving perhaps 40-50% upside back to the low $30s on mean reversion. Conviction is not high. x.com x.comÂ
Amazon is eating the advertising lunch of both The Trade Desk and AppLovin. The Trade Desk fell 20% after a massive earnings miss and another 15% the next day, with no recovery in sight, while AppLovin has dropped as well. x.com x.comÂ
Shopify can take on Amazon in agentic shopping by attacking weak spots Amazon can't address because it must protect its ads business and walled garden. Databricks CEO Ali Ghodsi described overtaking Snowflake by studying the competition and going after its weaknesses, a similar opportunity for Shopify. It isn't one-to-one: Prime and logistics mean Amazon could shut out agents and be fine, and @Appyg99 points to Amazon's fast fulfillment. x.com x.comÂ
