We recently published a list of 10 AI Stocks Wall Street is Talking About. In this article, we are going to take a look at where Reddit (NYSE:RDDT) stands against other AI stocks Wall Street is talking about.
Defiance ETFs CEO and CIO Sylvia Jablonski said in a recent program on Bloomberg that there are trillions of dollars of cash waiting on the sidelines ready to be invested in AI amid demand that is at an all-time high.
“There’s a biggest wealth transfer of our generation happening as we speak. And you know, Gen Z, you know, Gen Z, Millennial, Gen X kind of, you know, the younger traders are, this is where they’re allocating their funds to. And, you know, retail has definitely spoken, and institutions have definitely spoken, and they’re looking for that, that fourth industrial revolution allocation.”
Sylvia also talked about the relationship between quantum computing and AI and explained how this technology would improve AI systems:
“So chatbot AI is, you know, kind of version one. Quantum is taking everything to the next level. So you need quantum in order for it to be efficient. You need to process that data quickly. It will help, you know, essentially health care, cryptography, aerospace and defense, you know, blockchain technology. Anything you can think of will be better, too, with quantum supercomputing power.”
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For this article, we chose 10 AI stocks that are currently buzzing on the back of latest news and analyst ratings. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Reddit Inc (NYSE:RDDT)
Number of Hedge Fund Investors: 52
Morgan Stanley recently upgraded Reddit (NYSE:RDDT) to Overweight and set its price target for the stock at $200. The analysts noted the company’s engagement and advertising pipelines as key drivers for expected industry-leading growth in users, time spent, and ad revenue.
“We’ve been wrong on the sidelines with RDDT year-to-date,” Morgan Stanley analysts said. “But as we look ahead to 2025, we believe we haven’t fully accounted for this scaling platform that is rapidly implementing its pipeline of engagement and advertising initiatives.”
Morgan Stanley also sees Reddit Inc (NYSE:RDDT) outsized 33% compound annual growth rate (CAGR) for revenue from 2024 to 2027 and high incremental margins driving $1 billion in EBITDA by 2026.
With over 80 million daily active users, Reddit Inc (NYSE:RDDT) remains one of the fastest-growing social media platforms in the world. While Facebook and Twitter show signs of maturing growth, Reddit Inc (NYSE:RDDT) still has huge upside potential as more and more people flock to Reddit discussion boards for authentic opinions and discussion. User input from millions of people on various topics freely accessible to anyone is Reddit Inc (NYSE:RDDT)’s moat. As of 2023, users posted 16 billion comments on the platform, according to the company. That’s why companies are flocking to pay money to Reddit to use its data to train their AI models. Reddit Inc (NYSE:RDDT) has a licensing agreement with Alphabet Inc.’s Google worth $60 million to help train large language models. Reddit Inc (NYSE:RDDT) has signed licensing agreements totaling $203 million, with terms lasting two to three years. The company generated approximately $20 million from AI content deals last quarter and expects to exceed $60 million by year-end. Reddit Inc (NYSE:RDDT) has signed licensing agreements totaling $203 million, with terms lasting two to three years.
Overall, RDDT ranks 9th on our list of AI stocks Wall Street is talking about. While we acknowledge the potential of RDDT, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RDDT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.