Another big player is leaning into ad-supported streaming, and that has helped out The Trade Desk (TTD) and Roku (ROKU) in recent weeks — Amazon (AMZN) has now talked about adding an ad-supported version of its Amazon Prime Video service, though they also own several ad-supported streaming services already, so it doesn’t seem like that’s likely to be a big deal in the near future.

Still, with everyone in Hollywood still very committed to streaming, as cable cord-cutting continues, it’s starting to look like TTD CEO Jeff Green was right: There are millions of people who aren’t going to be willing to pay full freight for all this content, the content will have to be subsidized by advertisers. And though the ad market is a little less steady than it was a couple years ago, it does seem like buying ads on premium streaming content is a big focus of most major advertisers.

TTD also introduced the latest update of its ad-buying software recently, called Kokai… and no, it’s not a coincidence that “AI” happens to be part of that name, they’ve been using some variety of machine learning and automation to help advertisers do their media buying for years, including with their previous software platform (Koa), but they do say that AI is playing a larger role in that now. We’ll see if it helps TTD continue to attract a growing stream of ad dollars, but so far that has certainly been the trend. I’ve seen the Motley Fool touting TTD as an “AI” stock these days, just to ride on that momentum, though I wouldn’t get overly excited about it at the moment.

When does the valuation get absurd for The Trade Desk? Well, absent some broader re-rating of technology growth stocks in general, or of companies that are attached to the advertising industry, that probably depends on when the growth slows down and they disappoint (I guess it’s “if,” but they’ve hit “disappointment” periods before, and gravity tends to reassert itself eventually, so I think we’re safe in saying “when”).  The valuation is, well, foolish at TTD right now, they’re valued at more than 500X GAAP earnings.  But that doesn’t mean the stock is going to collapse tomorrow… they were at 1,000X earnings about ten months ago, at their previous peak in August of 2022, and the stock has held its own since then, roughly ...