Reddit and Marvell: Undervalued AI Synergies in a Correcting Market

The AI revolution is reshaping industries, but recent market corrections have created rare opportunities in two companies poised to capitalize on its infrastructure needs: Reddit (NYSE: RDDT) and Marvell Technology (NASDAQ: MRVL). Their intertwined roles in data monetization and chip innovation present a compelling long-term thesis, especially for investors willing to look past near-term volatility.

Reddit: Monetizing the AI Data Pipeline

Reddit's Q1 2025 results underscore its transformation from a social platform into a data asset powerhouse. With revenue surging 61% to $392.4 million, the company's other revenue stream—driven by data licensing—grew 66% to $33.7 million, now accounting for 9% of total revenue. This segment is critical: as AI models require vast training data, Reddit's 401.3 million weekly active users (up 31% YoY) provide a trove of user-generated content that's increasingly licensed to tech firms.

The company's profitability has also turned a corner. Net income hit $26.2 million (6.7% net margin), while adjusted EBITDA rose to $115.3 million (29.4% of revenue)—a stark improvement from negative margins in 2024. CEO Steve Huffman's optimism is justified: “When you want real opinions, you turn to real people.” With cash reserves exceeding $1.95 billion, Reddit is financially fortified to invest in AI synergies.

Yet the stock trades at just 19x trailing sales, down from 25x in early 2025—a discount that overlooks its strategic moat. Competitors like Google's AI “Overviews” pose a risk by potentially reducing direct traffic, but Reddit's logged-out international DAUq grew 54% YoY, signaling untapped global monetization.

Marvell: The AI Infrastructure Engine

Marvell's Q1 results highlight its dominance in AI-driven data center infrastructure. Revenue hit $1.895 billion (up 63% YoY), with data center revenue soaring 76% to $1.44 billion. Gross margins expanded to 59.8% (non-GAAP), reflecting scale efficiencies and demand for its custom silicon, including the industry-first 2nm SRAM for AI workloads.

Strategic partnerships are fueling growth:
- AWS: A multiyear co-design deal for cloud AI chips.
- NVIDIA: Integration with NVLink Fusion enables hyperscalers to deploy custom AI accelerators at 1.8 TB/s bandwidth.

With Q2 guidance calling for $2.00 billion in revenue and $0.67 non-GAAP EPS, Marvell is positioned to capitalize on the AI compute boom. Its June 17 investor event could unlock further catalysts, such as market-share targets for its electro-optics and custom silicon platforms.

The Synergy Play: Data to Chips

Reddit's data licensing and Marvell's AI chips form a closed-loop ecosystem. Reddit's user-generated content trains AI models, while Marvell's chips power the servers running those models. This synergy isn't yet reflected in their stock prices, but it's a foundational dynamic as enterprises and cloud providers race to build AI infrastructure.

Investors should note:
- Margin Expansion: Reddit's gross margin hit 90.5% (up 190 bps), while Marvell's margins are climbing due to higher volume and cost discipline.
- Market Penetration: Reddit's international revenue rose 82% YoY, and Marvell's data center segment now accounts for 76% of revenue—both companies are scaling into high-growth markets.

Risks, but Manageable Over 5+ Years

• Reddit: Google's AI features could reduce direct traffic, but its logged-out growth and data licensing diversify revenue.
• Marvell: Supply chain risks and macroeconomic uncertainty exist, but its partnerships with AWS and NVIDIA mitigate demand volatility.

Both companies have cash-rich balance sheets ($2 billion+ for Reddit, $333 million operating cash flow for Marvell in Q1) to weather near-term headwinds.

Investment Thesis: Buy the Dip, Hold the Trend

For investors with a 5+ year horizon:
1. Reddit: A 19x P/S multiple is a steal given its AI data moat and user growth. Target $150–$200+ over five years (currently $85).
2. Marvell: A $2.00B revenue run rate and margin expansion suggest upside to $80–$100 (currently $58).

Conclusion: A Rare Confluence of Value and Vision

Reddit and Marvell are undervalued beneficiaries of the AI era, each tackling a critical piece of the puzzle: data monetization and compute infrastructure. While risks exist, their financial resilience and strategic alignment with AI's growth trajectory make them compelling buy-and-hold candidates. The market's current skepticism is an opportunity—investors who act now may capture multiyear gains as these companies redefine the AI ecosystem.

Final note: For the cautious, consider dollar-cost averaging into these positions over the next 6–12 months.