Analyst Says Reddit (RDDT)'s AI Deals Are Just Beginning - How Big Could This Get?

We recently published a list of 10 Buzzing Stocks After Latest Earnings Season. In this article, we are going to take a look at where Reddit, Inc. (NYSE:RDDT) stands against other buzzing stocks after latest earnings season.

Markets were cheering the latest US-China trade deal, after which the two countries will significantly reduce tariffs on each other’s imports for 90 days. The deal practically negates all bear cases modeled by Wall Street analysts based on the impact of tariffs.

Sylvia Jablonski, Defiance ETFs CEO and CIO, called the deal a “game changer” during a program on CNBC.

“I think both countries probably saw a little bit of the demise of what would be here with a non-tariff deal as the data came in. You had a lot of complaints around China across all sectors and then in the US, retailers were reaching out to President Trump and saying that shelves are empty and, you know, a lot of panic about semiconductor software companies. I think that this is really a game changer for both countries, and the big message here is that both countries, it sounds like, decided that they really don’t want to decouple, and, you know, make America great might also mean that, you know, China stays.”

For this article, we picked 10 stocks currently making moves amid the latest earnings season. With each stock we have mentioned the latest hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Reddit, Inc. (NYSE:RDDT)

Number of Hedge Fund Investors: 52

LikeFolio‬ ‘s Megan Brantley explained during a program on Schwab Network why Reddit, Inc. (NYSE:RDDT) stands out among other social media platforms when it comes to the ads business:

“Reddit is in a unique position versus a lot of other companies that we often compare it to, just because of how its platform is designed and how consumers are using it. I would compare Reddit most closely to Pinterest in terms of having a captive audience of consumers who are searching for a very specific topic, have a specific objective, and are looking for more information. But Reddit may even be better because it’s so text-based versus image-based, and I think that’s part of the reason why we’ve seen such traction in Reddit’s advertising.

At least whenever we look at Reddit—I don’t have this chart for you, but I do have a stat—I looked at Reddit and Snapchat because we just saw that report out of Snapchat, and we saw a bit of an underwhelming advertising report. When we look at visits to Reddit’s ad platform specifically just in the last two weeks, we have those up about 80% on a year-over-year basis, which is really strong. Snapchat’s were down about 30% in the same period. So I think there’s a bit of a divergence, and a lot of that has to do with the fact that when consumers go to Reddit, they’re looking for recommendations. Ads don’t feel quite so intrusive as they might on other platforms where ads can interrupt what the consumer is trying to do.”

With over 80 million daily active users, Reddit Inc (NYSE:RDDT) remains one of the fastest-growing social media platforms in the world. While Facebook and Twitter show signs of maturing growth, Reddit Inc (NYSE:RDDT) still has huge upside potential as more and more people flock to Reddit discussion boards for authentic opinions and discussion. User input from millions of people on various topics freely accessible to anyone is Reddit Inc (NYSE:RDDT)’s moat. As of 2023, users posted 16 billion comments on the platform, according to the company. That’s why companies are flocking to pay money to Reddit to use its data to train their AI models.  Reddit Inc (NYSE:RDDT) has a licensing agreement with Alphabet Inc.’s Google worth $60 million to help train large language models. Reddit Inc (NYSE:RDDT) has signed licensing agreements totaling $203 million, with terms lasting two to three years. The company generated approximately $20 million from AI content deals last quarter and expects to exceed $60 million by year-end. Reddit Inc (NYSE:RDDT) has signed licensing agreements totaling $203 million, with terms lasting two to three years.

Munro Global Growth Small & Mid Cap Fund stated the following regarding Reddit, Inc. (NYSE:RDDT) in its Q4 2024 investor letter:

“Key contributors to performance over the quarter were Reddit and AppLovin (see stock story on page 5). Reddit, Inc. (NYSE:RDDT) delivered a strong set of results, demonstrating impressive revenue growth and expanding operating margins. As the world grapples with misinformation and AI-generated content, we continue to view Reddit’s position as a unique platform hosting the largest volume of human conversations globally becoming increasingly valuable.”

Overall, RDDT ranks 7th on our list of buzzing stocks after latest earnings season. While we acknowledge the potential of RDDT as an investment, our conviction lies in the belief that under-the-radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than RDDT but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.