Key Points
The Information reported that OpenAI and The Trade Desk were in talks to work together.
Generative AI could represent a valuable new revenue stream for The Trade Desk.
Repairing its core business and fending off competition is more important for the stock to bounce back.
The Trade Desk (NASDAQ: TTD) investors have been desperate for some good news, and today they finally got some.
Shares of the independent adtech platform are jumping on reports that it is in talks with OpenAI to work with it to sell ads on ChatGPT.
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As a result, the stock finished the day up 18.4%.
Image source: Getty Images.
The Trade Desk potentially gains in AI foothold
According to The Information, The Trade Desk and OpenAI are discussing a potential partnership, which could be huge if ChatGPT becomes the kind of ads powerhouse that Google Search is. As a demand-side platform (DSP), Trade Desk helps aggregate, automate, and optimize ad-buying for brands, and as an independent platform, it could hold appeal for OpenAI, who would likely be more reluctant to work with Google or Amazon than an independent platform like The Trade Desk.
The details were thin, but they were enough to inject new life into the stock, which has collapsed over the last year on slowing growth and what looks like market share losses to "walled gardens" like Amazon and Google.
Is The Trade Desk a buy on the news?
At this point, this seems like a preliminary report on a potentially promising partnership rather than any sort of clear tailwind for the company. Given that, there's not enough here to significantly alter The Trade Desk's value proposition.
The stock has gotten much cheaper as it's plunged more than 80%, but The Trade Desk will need more to stem the slowdown in its revenue growth in order for the stock to make a comeback. It needs more than just a deal with OpenAI to do that. It needs to shore up its core business.
Should you buy stock in The Trade Desk right now?
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Jeremy Bowman has positions in Amazon and The Trade Desk. The Motley Fool has positions in and recommends Amazon and The Trade Desk. The Motley Fool has a disclosure policy.
