RDDT's AI Tools Gain Traction: Is Innovation Driving Top-Line Growth?

Reddit RDDT is benefiting from its investment in AI-powered tools, which are driving the company’s user engagement and contributing to top-line growth. In the third quarter of 2025, Reddit reported revenues of $584.91 million, which had increased 68% year over year.In the third quarter of 2025, Average Revenue Per User (ARPU) grew 41% year over year to $5.04, indicating that portfolio expansions are driving higher monetization per user. In the reported quarter, RDDT reported 116 million daily active users and 444 million weekly active users, both increasing 20% year over year.Reddit is expanding its search-led engagement through its AI-powered features. The introduction of Reddit Answers, a feature that uses community-driven insights to enhance search functionality, has been noteworthy.In the third quarter of 2025, more than 75 million people searched on Reddit weekly, showcasing the growing popularity of this feature. The company also integrated Reddit Answers into its core search functionality, increasing visibility across conversations and expanding its reach to non-English languages, including Spanish, German, Italian, French, and Portuguese. Reddit’s investment in AI-powered tools has further strengthened its portfolio by improving user experience and community moderation. In September 2025, Reddit launched Reddit Pro tools for publishers. This new set of features aims to help media outlets share, track, and engage with their content easily. It targets Reddit’s 110 million daily active users. The update includes article insights, automatic RSS imports and AI-powered community recommendations. It also offers a better in-app link viewing experience and discussion tools.RDDT Faces Stiff CompetitionRDDT is facing stiff competition from competitors like Pinterest PINS and Snap SNAP, which are also expanding into advertising to compete in the rapidly growing digital ad market.Snap is benefiting from increased engagement with its content and augmented reality (AR) features. In the third quarter of 2025, Snap’s AR engagement remained strong, with more than 8 billion daily uses of AR lenses and 350 million daily active users engaging with AR experiences.  New AI-powered lenses, such as the Imagine Lens, have further enhanced Snap’s user creativity and interaction.Pinterest’s AI investments are playing an important role in enhancing user experiences and driving top-line growth. In the third quarter of 2025, Pinterest’s AI-powered visual search capabilities saw 44% year-over-year growth in queries, with 80 billion monthly queries overall. The company’s AI tools, such as Pinterest Performance+ and ROAS bidding, are gaining traction among advertisers.RDDT’s Share Price Performance, Valuation, and EstimatesRDDT’s shares have gained 13.6% year to date, underperforming the broader Zacks Computer & Technology sector’s return of 23%. The company has outperformed the Internet - Software industry’s rise of 3%.RDDT Stock's PerformanceImage Source: Zacks Investment ResearchRDDT shares are overvalued, with a forward 12-month Price/Sales of 12.29X compared with the Computer & Technology sector’s 6.63X. RDDT has a Value Score of F.Price/Sales (F12M)Image Source: Zacks Investment ResearchThe consensus mark for 2025 earnings is pegged at $2.35 per share, which has increased 26% over the past 30 days. This suggests 170.57% year-over-year growth.Reddit Inc. Price and Consensus Reddit Inc. price-consensus-chart | Reddit Inc. QuoteRDDT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Snap Inc. (SNAP): Free Stock Analysis Report Pinterest, Inc. (PINS): Free Stock Analysis Report Reddit Inc. (RDDT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks