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Reddit RDDT and Alphabet GOOGL are major players in the digital advertising space. While RDDT is an emerging social media platform gaining traction with community-driven advertising, GOOGL remains the dominant force in global search and digital ad markets.
Per the Grand View Research report, the global digital advertising market size was valued at $488.4 million in 2024 and is expected to reach $1,164.25 million by 2030, registering a CAGR of 15.4% from 2025 to 2030. Both Reddit and GOOGL are expected to benefit from this rapid growth pace.
RDDT or GOOGL — Which of these Ad-Tech Powerhouse stocks has the greater upside potential? Let’s find out.
Reddit is benefiting from strong growth in user engagement, including rising daily and weekly active users, ARPU gains, and the expansion of advertiser tools such as Dynamic Product Ads, Reddit Pixel, and Conversion API.
In the second quarter of 2025, Reddit’s advertising revenue grew 84% year over year to $465 million, driven by both existing advertisers deepening their investments and a 50% increase in active advertiser count. This growth highlights Reddit’s ability to attract advertisers across large, mid-market and small-to-medium-sized businesses.
The company’s focus on automation and usability is another driver of its advertising success. The platform has integrated tools like Smartly, which combines Reddit’s audience and performance data with AI-powered advertising capabilities, making it easier for advertisers to launch, scale, and optimize campaigns.
Reddit is also expanding search-led engagement through Reddit Answers. In the second quarter of 2025, Reddit Answers demonstrated significant growth, with weekly users increasing from 1 million to 6 million. Moreover, improving impressions and a rise in pricing are driven by Reddit’s investments in performance and targeting in the middle and lower funnel, which is expected to drive ad revenues.
Alphabet generates advertising revenues from Google Search & other, YouTube ads, and the Google Network, which includes revenues generated on Google Network properties participating in AdMob, AdSense, and Google Ad Manager.
The Google search engine is advanced, simple, and adaptable, all at once. Alphabet’s initiatives to deploy AI and infuse AI in Search are driving segment growth. Alphabet’s initiatives, like the Mobile Friendly algorithm change, product listings, flight search, Google Now, and the AI infusion, are expected to help drive Alphabet’s advertising revenues.
In the second quarter of 2025, Alphabet's advertising revenues rose 10.4% year over year to $71.34 billion and accounted for 74% of total revenues. Search and other revenues increased 11.7% year over year to $54.19 billion. YouTube’s advertising revenues improved 13.1% year over year to $9.77 billion.
The company's introduction of Asset Studio, an AI-powered creative asset generation tool, highlights its commitment to empowering advertisers. In the second quarter of 2025, the company announced that more than 2 million advertisers now use GOOGL’s AI-powered asset generation tools to run ads, up 50% from the year-ago period.
In the year-to-date period, shares of Reddit and Alphabet have rallied 42% and 22.7%, respectively. The outperformance can be attributed to strong ad revenue growth, driven by improved targeting, performance tools, global expansion and increased engagement through search-led initiatives, such as Reddit Answers.
Despite a robust portfolio and clientele, Alphabet is facing challenging macroeconomic conditions and intense competition.
Valuation-wise, RDDT and GOOGL shares are currently overvalued, as suggested by a Value Score of F and D, respectively.
In terms of the forward 12-month Price/Sales, RDDT shares are trading at 17.35X, which is higher than GOOGL’s 7.76X.
The Zacks Consensus Estimate for RDDT’s 2025 earnings is pegged at $1.81 per share, which has remained unchanged over the past 30 days, indicating a 154.35% rise year over year.
Reddit Inc. price-consensus-chart | Reddit Inc. Quote
The Zacks Consensus Estimate for GOOGL’s 2025 earnings is pegged at $10 per share, which has risen 0.6% over the past 30 days, indicating a 24.38% increase year over year.
Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote
While both Reddit and Alphabet stand to benefit from the booming digital advertising market, Reddit offers greater upside potential given its rapid revenue growth, surging advertiser base, and expanding engagement tools.
Alphabet generates a significant portion of its revenues from advertising. However, the company always faces the risk of reduced spending by advertisers. It has already been suffering from a sluggish Network ad business for the past few quarters. In the second quarter of 2025, Google Network ad revenues decreased 1.2% year over year to $7.35 billion. Stiff competition also remains a concern.
Currently, Reddit sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick than GOOGL, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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