Reddit’s Next AI Catalyst Isn’t User Growth — It’s What Alphabet’s Google and OpenAI Do Next
Reddit's upcoming AI catalyst may not be user growth but rather what Google and OpenAI decide to do next. The key deals between Reddit and these tech giants, which provide access to its massive archive of human conversations, are set to expire next year. Baird analyst Colin Sebastian has maintained a Neutral rating on the stock with an $185.00 price target.
These deals, worth $60 million for Google and $70 million for OpenAI annually, are crucial for AI training and grounding. Reddit's CEO, Steve Huffman, hinted at potentially higher fees for the 2027 renewals, shifting from flat to usage-based pricing. The bull case for Reddit lies in the ongoing value of its data, as conversations continuously add new information.
However, if companies reduce their reliance on Reddit's data, they could face significant losses. While the current share price reflects a near-low-end scenario, Baird suggests that if the data retains its value, there could be a base and bull case upside of roughly $10 and $20, respectively.
Written by urgent.news from Yahoo Finance's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
