10 Best AI Stocks to Buy According to Reddit

3. Snap Inc. (NYSE:SNAP)

Number of Hedge Fund Holders: 34

Snap Inc. (NYSE:SNAP) is a technology company known for popular products like Snapchat, Spectacles, and Bitmoji. Snapchat, in particular, uses AI to enhance user experiences.

The company is also investing in GenAI to empower developers to create more sophisticated AR experiences. For instance, the introduction of AI-powered tools in Lens Studio enables developers to easily generate full 3D characters and animations. Additionally, its AI-powered chatbot, My AI, provides personalized responses and assistance to users, leading to increased user engagement, which is evident by the tripling of Snaps sent to My AI in Q3.

The company had strong Q3 2024 financial results, with revenue improving by 15.28% year-over-year to $1.37 billion. This growth was primarily driven by a 16% increase in direct response advertising revenue, which also uses AI for ad targeting and optimization. Snap Inc. (NYSE:SNAP) is enhancing user experience, and unlocking new opportunities for advertising and revenue generation through AI.

RiverPark Large Growth Fund stated the following regarding Snap Inc. (NYSE:SNAP) in its first quarter 2024 investor letter:

“Snap Inc. (NYSE:SNAP): SNAP was our top detractor in the quarter despite reporting fourth quarter results generally in line with or better than expectations. Revenue growth of 5% was roughly in line with investor estimates and at the high end of guidance, and EBITDA of $159 million was $49 million better than estimates. Daily Active Users (DAUs) were also ahead of investor expectations, ending the quarter at 414 million (about 2 million better), driven by continued innovation in Snap’s offerings. Revenue guidance for 1Q24 was also roughly in line with investor estimates, but EBITDA guidance of negative $55-95 million was well below estimates. The company pointed to increased infrastructure costs and a US focused marketing campaign for the lower-than-expected margin guidance.

Although the company continues to face near-term macro headwinds, we believe SNAP can accelerate its revenue growth over the next several years. With 2023 revenue expected to be $4.6 billion (as compared with Meta’s $134 billion), we believe SNAP has a long runway for both revenue growth and expanded profitability as it improves platform functionality, continues to grow its audience (daily active users continue to grow at a double-digit rate), and expands its monetization.”