Here's Why This Analyst Chose Reddit As 2026 Top Pick

Reddit, Inc. (NYSE:RDDT) is leaning into its massive trove of human conversations as demand surges for high-quality AI training data.

The platform is also pushing new product features and ad tools as it works to deepen engagement and expand monetization.

Needham analyst Laura Martin reiterated the Buy rating on the stock, with a price forecast of $300.

Also Read: Reddit Files Lawsuit Against Australia’s Under-16 Social Media Ban Citing Free Speech Violation

Martin said Reddit’s largest upside comes from licensing data to train generative AI language models. She believes large language models require natural language understanding and conversational cultural awareness.

Martin views Reddit as uniquely positioned to provide this type of human conversational data. She noted Reddit’s content library includes about one billion posts and 16 billion comments.

Martin said the platform adds roughly 1.2 million posts and 7.5 million comments daily.

According to the analyst, Reddit lacks comparable high-quality substitutes on a similar scale. That scarcity, she said, gives Reddit meaningful pricing leverage.

Martin noted Reddit signed data licensing agreements with OpenAI and Alphabet Inc.’s (NASDAQ:GOOGL) (NASDAQ:GOOG) Google Gemini. She estimated each deal totals roughly $200 million payable over three years.

Martin expects Reddit data to become essential for all major generative AI models.

Conviction List Rationale

The analyst highlighted that she added Reddit to Needham’s Conviction List, replacing Roku, Inc. (NASDAQ:ROKU) after strong year-to-date performance.

She cited Reddit’s entirely human-generated content as a critical advantage for AI training.

Martin said human-authored content improves trust, authenticity, and model usefulness. She estimated Reddit already generates more than $100 million annually from AI licensing fees.

Martin expects additional agreements with Anthropic and Perplexity following ongoing litigation. She believes licensing revenue could meaningfully expand beyond current levels.

Product And Growth Drivers

Martin said Reddit’s 2026 priorities include reducing onboarding friction to accelerate user growth.

She expects improvements in Search and Answers to boost engagement and reduce churn.

Martin said Reddit Max could expand addressable markets and improve profitability.

The analyst highlighted performance advertising as a full-funnel solution capturing larger advertiser budgets.

She estimated revenue growth of 64% in fiscal 2025 and nearly 40% in 2026.

Market Position And Monetization

Martin said Reddit’s revenue base remains small compared with Meta Platforms, Inc.’s (NASDAQ:META) Facebook and Instagram platforms.

She said advertiser checks highlight Reddit’s niche communities and high-intent audiences.

Martin described Reddit as a high-return platform for narrowly targeted advertisers. She said subreddit communities enable precise targeting with lower competition. Martin believes this structure reduces wasted ad spending.

The analyst added that Reddit ads influence consideration between awareness and purchase. Martin called this positioning rare and valuable for advertisers.

Outlook

Martin raised estimates for fourth-quarter 2025, fiscal 2026, and fiscal 2027. She lowered daily active user growth assumptions while increasing ARPU projections.

Martin forecast fourth-quarter revenue of $664 million, up 55% year over year. She estimated a gross margin of 89% and operating income growth exceeding 200%.

She expects fiscal 2026 revenue of $2.95 billion and adjusted EBITDA of $1.25 billion.

Martin forecast fiscal 2027 revenue near $3.8 billion with expanding margins. She expects continued ARPU growth across domestic and international markets.

RDDT Price Action: Reddit shares were down 1.01% at $230.80 at the time of publication on Tuesday, according to Benzinga Pro data.

Image via Shutterstock

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