Reddit Projects Strong Q4 as AI Ad Tools Drive Growth

Reddit is set to close the year on a high note, with the social media company forecasting fourth-quarter revenue above Wall Street expectations, fueled by its expanding artificial intelligence-driven advertising tools.

Shares of Reddit jumped nearly 9% in after-hours trading after the company revealed it expects revenue between $655 million and $665 million, surpassing analysts’ estimate of $637.9 million, according to LSEG data.

The company’s AI-powered ad system allows marketers to place more precise and context-driven ads directly within Reddit’s thousands of subreddits, helping brands reach audiences based on their real-time discussions and interests. This has significantly boosted ad efficiency and engagement, encouraging marketers to spend more on the platform.

Reddit reported a 68% jump in third-quarter revenue to $585 million, easily topping market forecasts of $545.7 million. The company’s average revenue per user rose 41%, highlighting the success of its monetization efforts.

Despite slower growth in U.S. daily active unique visitors — up 7% from a year earlier compared to 11% in the prior quarter — Reddit’s global DAUq surged 19% to 116 million, indicating stronger traction internationally.

Reddit’s data licensing agreements with major tech firms like Google and OpenAI also remain a valuable source of revenue, as the demand for quality data to train AI systems continues to grow. The company recently filed lawsuits against data-scraping firms, emphasizing its intent to protect user-generated content from unauthorized use.

With the ongoing integration of AI features such as machine translation across 30 languages, Reddit is positioning itself as both a social media platform and a data powerhouse. As competition from TikTok and Meta intensifies, Reddit’s focus on intelligent advertising and community-driven content could be its biggest advantage heading into 2026.