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RDDT vs. AMZN: Which Digital Advertising Stock Is a Better Buy?
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Key Takeaways
Reddit posted 74% ad revenue growth in Q1 2026, with active advertisers up more than 75%.
RDDT's AI-powered Reddit Max reduced cost per action by 17% and lifted conversions 25%.
Amazon Ads revenue rose 22% in Q1 2026 as AI tools and Netflix targeting expanded its reach.
Reddit (RDDT - Free Report) and Amazon (AMZN - Free Report) are major players in the digital advertising space. While RDDT is an emerging social media platform gaining traction with community-driven advertising, Amazon continues expanding its high-margin advertising business powered by e-commerce traffic and consumer data.
RDDT or AMZN — Which of these Digital Advertising stocks has the greater upside potential? Let’s find out.
The Case for RDDT Stock
Reddit is benefiting from strong demand in its advertising business, which has become a key growth driver of the company’s impressive financial performance and future growth prospects. In the first quarter of 2026, Reddit reported total revenues of $663 million, up 69% year over year, with advertising revenue growing even faster at 74% to $625 million. This marks Reddit’s seventh consecutive quarter of revenue growth above 60%, underscoring the sustained momentum in its ad business.
The expansion of advertiser tools such as Dynamic Product Ads (DPA), Reddit Pixel, and CAPI has been a key catalyst. In the first quarter of 2026, DPA has also driven more than 90% higher return on ad spend year over year, with brands like Liquid I.V. seeing DPAs outperform other campaigns by 40%. These advancements are attracting a broader range of advertisers. In the first quarter of 2026, active advertisers grew more than 75% year over year.
Reddit’s investments in AI-powered tools remain noteworthy. The launch and adoption of Reddit Max, an automated and AI-powered campaign tool, enabled advertisers to achieve a 17% reduction in cost per action and 25% more conversion outcomes in the first quarter of 2026. About 50% of Max campaign advertisers are now using AI-powered creative features, and brands like Cozy have reported 35% higher ROAS and 28% lower cost per acquisition using these tools.
The Case for AMZN Stock
Amazon is benefiting from strong demand in its advertising business, which continues to be a major growth driver for the company. In the first quarter of 2026, Amazon Ads generated $17.2 billion in revenues, representing a robust 22% year-over-year increase. This robust performance underscores the increasing importance of advertising as a core pillar of Amazon’s business model and highlights the company’s ability to capture value across its vast ecosystem.
Amazon's expanding portfolio remains noteworthy. The company is integrating AI into its advertising offerings, making it easier for brands of all sizes to create, manage, and optimize campaigns. The expansion of Creative Agent, an AI-powered tool that automates the ad creative process, and the introduction of Sponsored Products and Brand Prompts in Rufus (Amazon’s AI shopping assistant) are making advertising more accessible and effective. Nearly 20% of shoppers who interact with Brand Prompts in Rufus continue the conversation about that brand, indicating high engagement and conversion potential.
Further expanding its portfolio, in the first quarter of 2026, Amazon introduced Amazon Audiences for advertisers using Amazon Ads to purchase advertising on Netflix, enabling brands to leverage Amazon’s proprietary shopping, streaming, and browsing signals to reach highly relevant Netflix audiences and drive stronger campaign performance.
Price Performance and Valuation of RDDT and AMZN
In the year-to-date period, shares of Reddit have plunged 32% while Amazon's shares have gained 15.8%. RDDT shares have lost due to a challenging macroeconomic environment and seasonal volatility. Also, stiff competition in the digital advertising market poses a significant challenge for Reddit.
Amazon's shares are benefiting from international expansion and diversification across e-commerce, AWS cloud services, advertising, and streaming, creating multiple revenue streams while reducing concentration risk.
RDDT and AMZN Stock Performance
Image Source: Zacks Investment Research
Valuation-wise, RDDT and AMZN shares are currently overvalued, as indicated by Value Score D.
In terms of the forward 12-month Price/Sales, RDDT shares are trading at 9.46X, which is higher than AMZN's 6.51X.
RDDT and AMZN Valuation
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for RDDT & AMZN?
The Zacks Consensus Estimate for RDDT’s 2026 earnings is pegged at $4.83 per share, which increased 21% over the past 30 days. This indicates an 84.35% rise year over year.
The Zacks Consensus Estimate for AMZN's 2026 earnings is pegged at $8.85 per share, which increased 14.4% over the past 30 days. This indicates a 23.43% increase year over year.
RDDT earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, with an average surprise of 67%. AMZN's earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, while missing the same twice, with an average surprise of 11.43%. Reddit’s average surprise is higher than that of Amazon.
Conclusion
While both Reddit and Amazon stand to benefit from the booming digital advertising market, Reddit offers stronger upside potential driven by rapid ad revenue growth, rising advertiser adoption, improving ROAS and higher earnings growth momentum.
Despite Amazon's broader advertising expansion, the company’s expanding debt burden reduces financial flexibility amid rising interest rates. Intensifying competition is an overhang.
View the Zacks #1 Rank List
Image: Bigstock
RDDT vs. AMZN: Which Digital Advertising Stock Is a Better Buy?
Key Takeaways
Reddit (RDDT - Free Report) and Amazon (AMZN - Free Report) are major players in the digital advertising space. While RDDT is an emerging social media platform gaining traction with community-driven advertising, Amazon continues expanding its high-margin advertising business powered by e-commerce traffic and consumer data.
RDDT or AMZN — Which of these Digital Advertising stocks has the greater upside potential? Let’s find out.
The Case for RDDT Stock
Reddit is benefiting from strong demand in its advertising business, which has become a key growth driver of the company’s impressive financial performance and future growth prospects. In the first quarter of 2026, Reddit reported total revenues of $663 million, up 69% year over year, with advertising revenue growing even faster at 74% to $625 million. This marks Reddit’s seventh consecutive quarter of revenue growth above 60%, underscoring the sustained momentum in its ad business.
The expansion of advertiser tools such as Dynamic Product Ads (DPA), Reddit Pixel, and CAPI has been a key catalyst. In the first quarter of 2026, DPA has also driven more than 90% higher return on ad spend year over year, with brands like Liquid I.V. seeing DPAs outperform other campaigns by 40%. These advancements are attracting a broader range of advertisers. In the first quarter of 2026, active advertisers grew more than 75% year over year.
Reddit’s investments in AI-powered tools remain noteworthy. The launch and adoption of Reddit Max, an automated and AI-powered campaign tool, enabled advertisers to achieve a 17% reduction in cost per action and 25% more conversion outcomes in the first quarter of 2026. About 50% of Max campaign advertisers are now using AI-powered creative features, and brands like Cozy have reported 35% higher ROAS and 28% lower cost per acquisition using these tools.
The Case for AMZN Stock
Amazon is benefiting from strong demand in its advertising business, which continues to be a major growth driver for the company. In the first quarter of 2026, Amazon Ads generated $17.2 billion in revenues, representing a robust 22% year-over-year increase. This robust performance underscores the increasing importance of advertising as a core pillar of Amazon’s business model and highlights the company’s ability to capture value across its vast ecosystem.
Amazon's expanding portfolio remains noteworthy. The company is integrating AI into its advertising offerings, making it easier for brands of all sizes to create, manage, and optimize campaigns. The expansion of Creative Agent, an AI-powered tool that automates the ad creative process, and the introduction of Sponsored Products and Brand Prompts in Rufus (Amazon’s AI shopping assistant) are making advertising more accessible and effective. Nearly 20% of shoppers who interact with Brand Prompts in Rufus continue the conversation about that brand, indicating high engagement and conversion potential.
Further expanding its portfolio, in the first quarter of 2026, Amazon introduced Amazon Audiences for advertisers using Amazon Ads to purchase advertising on Netflix, enabling brands to leverage Amazon’s proprietary shopping, streaming, and browsing signals to reach highly relevant Netflix audiences and drive stronger campaign performance.
Price Performance and Valuation of RDDT and AMZN
In the year-to-date period, shares of Reddit have plunged 32% while Amazon's shares have gained 15.8%. RDDT shares have lost due to a challenging macroeconomic environment and seasonal volatility. Also, stiff competition in the digital advertising market poses a significant challenge for Reddit.
Amazon's shares are benefiting from international expansion and diversification across e-commerce, AWS cloud services, advertising, and streaming, creating multiple revenue streams while reducing concentration risk.
RDDT and AMZN Stock Performance
Image Source: Zacks Investment Research
Valuation-wise, RDDT and AMZN shares are currently overvalued, as indicated by Value Score D.
In terms of the forward 12-month Price/Sales, RDDT shares are trading at 9.46X, which is higher than AMZN's 6.51X.
RDDT and AMZN Valuation
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for RDDT & AMZN?
The Zacks Consensus Estimate for RDDT’s 2026 earnings is pegged at $4.83 per share, which increased 21% over the past 30 days. This indicates an 84.35% rise year over year.
Reddit Inc. Price and Consensus
Reddit Inc. price-consensus-chart | Reddit Inc. Quote
The Zacks Consensus Estimate for AMZN's 2026 earnings is pegged at $8.85 per share, which increased 14.4% over the past 30 days. This indicates a 23.43% increase year over year.
Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote
RDDT earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, with an average surprise of 67%. AMZN's earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, while missing the same twice, with an average surprise of 11.43%. Reddit’s average surprise is higher than that of Amazon.
Conclusion
While both Reddit and Amazon stand to benefit from the booming digital advertising market, Reddit offers stronger upside potential driven by rapid ad revenue growth, rising advertiser adoption, improving ROAS and higher earnings growth momentum.
Despite Amazon's broader advertising expansion, the company’s expanding debt burden reduces financial flexibility amid rising interest rates. Intensifying competition is an overhang.
Both Reddit and Amazon currently carry a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.