RDDT vs. GOOGL: Which Digital Advertising Stock Has an Edge Now?

Core Insights - Reddit (RDDT) and Alphabet (GOOGL) are significant players in the digital advertising sector, with RDDT emerging as a community-driven platform and GOOGL maintaining its dominance in global search and digital ads [1][2] Digital Advertising Market Overview - The global digital advertising market was valued at $573.06 million in 2025 and is projected to grow to $2,114.41 million by 2034, with a CAGR of 15.61% from 2026 to 2034 [2] Reddit (RDDT) Analysis - Reddit's advertising revenues increased by 74% year over year to $549 million in Q3 2025, driven by enhanced user engagement [3][10] - The platform reported 116 million daily active users and 444 million weekly active users, both up 20% year over year, with ARPU rising 41% to $5.04 [4][10] - Reddit's beta launch of Max campaigns, an AI-powered ad solution, has shown early testers achieving up to 27% more conversions [5] Alphabet (GOOGL) Analysis - Alphabet's advertising revenues grew by 12.6% year over year to $74.18 billion in Q3 2025, making up 85.2% of total revenues [6][10] - YouTube's advertising revenues improved by 15% year over year to $10.26 billion, with strong growth attributed to AI initiatives [6][8] - Alphabet's ongoing AI integration in its advertising products is expected to unlock new opportunities for advertisers [8] Stock Performance and Valuation - Over the past six months, Reddit's shares have increased by 57.9%, while Alphabet's shares have risen by 73.6% [11] - Both RDDT and GOOGL shares are currently considered overvalued, with RDDT trading at a forward Price/Sales ratio of 14.21X compared to GOOGL's 10.13X [15] Earnings Estimates - The Zacks Consensus Estimate for RDDT's 2025 earnings is $2.35 per share, indicating a 170.57% year-over-year increase [18] - GOOGL's 2025 earnings estimate is $10.58 per share, reflecting a 31.59% year-over-year increase [18] Conclusion - Both Reddit and Alphabet are positioned to benefit from the growing digital advertising market, but Alphabet is seen as having greater upside potential due to its advancements in AI and cloud computing investments [19]