Reddit and Alphabet: Ad-Tech Powerhouses' Upside Potential

Reddit RDDT and Alphabet GOOGL are major players in digital advertising. RDDT's community-driven advertising and growing user engagement drive advertising revenue growth of 84% YoY to $465 million in Q2 2025. GOOGL's advertising revenues rose 10.4% YoY to $71.34 billion in Q2 2025, driven by search and YouTube ad growth. Both stocks benefit from the global digital advertising market's expected 15.4% CAGR from 2025 to 2030.

Reddit (NYSE: RDDT) and Alphabet Inc. (GOOGL) are major players in the digital advertising sector, each leveraging its unique strengths to drive growth and capture a significant share of the market. In the second quarter of 2025, Reddit reported a substantial 84% year-over-year (YoY) increase in advertising revenue to $465 million [1]. This growth is attributed to the platform's community-driven advertising model and the increasing user engagement, which has driven a 21% year-over-year increase in daily active users to 110.4 million [1].

On the other hand, Alphabet Inc. (GOOGL), the parent company of Google, saw its advertising revenues rise by 10.4% YoY to $71.34 billion in Q2 2025 [1]. This growth was primarily driven by robust performance in search and YouTube advertising. Both companies benefit from the global digital advertising market's expected compound annual growth rate (CAGR) of 15.4% from 2025 to 2030 [1].

Reddit's success in monetizing its user base is evident in its ability to attract advertisers seeking to reach a highly engaged audience. The platform's AI-powered features, such as Reddit Answers, have become a go-to resource for users seeking product recommendations and information, making it an attractive advertising destination. Additionally, Reddit's machine translation initiative is helping to drive international growth, appealing to non-English speaking users and expanding its reach globally [1].

Alphabet Inc., with its vast array of products and services, has a diversified advertising portfolio. Google Search and YouTube continue to be dominant platforms, benefiting from their widespread usage and the ability to target users based on their search history and viewing habits. The company's investment in AI and machine learning technologies further enhances its advertising capabilities, allowing for more personalized and effective ad campaigns [1].

Both companies face challenges in navigating the digital advertising landscape. For Reddit, the key challenge is maintaining user engagement while increasing ad load without alienating users. The platform must strike a balance between revenue growth and user satisfaction to sustain its momentum. Alphabet Inc., meanwhile, must contend with regulatory pressures and increasing competition from other digital platforms, such as TikTok and Snapchat, which are gaining traction in the advertising market [1].

In conclusion, Reddit and Alphabet Inc. are well-positioned to benefit from the growing digital advertising market. Reddit's community-driven approach and Alphabet Inc.'s diversified product suite offer unique advantages in capturing market share and driving revenue growth. As the market continues to evolve, both companies will need to adapt and innovate to maintain their competitive edge.

References:
[1] https://finance.yahoo.com/news/prediction-reddit-millionaire-maker-stock-101500362.html
[2] https://www.marketbeat.com/instant-alerts/filing-reddit-inc-rddt-shares-sold-by-trexquant-investment-lp-2025-09-03/