We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
RDDT vs. GOOGL: Which Digital Advertising Stock Has an Edge Right Now?
Read MoreHide Full Article
Key Takeaways
Reddit's ad revenues jumped 64% in Q2 2026, strengthening its digital advertising growth story.
Reddit Max usage rose more than 60%, while revenue from Max campaigns increased by more than 150%.
Alphabet's ad revenue rose 14.4%, but tougher Search comparisons and FX headwinds may limit upside.
Reddit (RDDT - Free Report) and Alphabet (GOOGL - Free Report) are major players in the digital advertising space. While Reddit is an emerging social media platform gaining traction with community-driven advertising, Alphabet remains the dominant force in global search and digital ad markets.
Reddit or Alphabet — 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 second quarter of 2026, Reddit’s advertising revenues grew 64% year over year to $762 million, outpacing even its impressive total revenue growth of 61%. This growth is broad-based, with strength across various sales channels, including large customers, mid-market, and Small and Medium-sized Businesses (SMBs).
Reddit’s innovation in its ad stack is another key factor in strengthening its competitive edge. The launch and rapid adoption of Reddit Max, an AI-driven suite for ad automation and optimization, has delivered significant results. Advertiser usage of Max grew by more than 60% from the first quarter, and revenues from Max campaigns increased by more than 150%. Features like tailored creatives and dynamic product ads are helping brands achieve better outcomes, such as Lenovo’s 40% higher purchase value with Max campaigns compared to standard campaigns.
The company is also expanding its advertiser base and ecosystem, making it easier for businesses of all sizes to succeed on Reddit. Scaled channel revenues, which include mid-market and SMBs, doubled year over year, and active advertisers grew more than 70% in the second quarter of 2026. Integrations with platforms like Shopify and a growing ads API ecosystem are streamlining onboarding and campaign management, further fueling Reddit’s commercial momentum.
With ongoing investments in product innovation, user experience and ad technology, Reddit is poised to capture more advertising dollars and further strengthen its position in the digital ad market. For the third quarter of 2026, management expects revenues between $860 million and $870 million, representing 47% to 49% year-over-year growth.
The Case for GOOGL Stock
Alphabet is benefiting from strong momentum across its advertising business, supported by continued growth in Google Search and YouTube and deeper integration of Gemini across its ad infrastructure. Google advertising revenues increased 14.4% year over year to $81.63 billion in the second quarter of 2026. Google Search & other revenues jumped 17% to $63.27 billion, while YouTube advertising revenues increased 13% to $11.06 billion. Retail and finance were the biggest contributors to Search growth, while direct response and brand advertising supported YouTube.
Alphabet’s growing use of Gemini across its advertising infrastructure remains a key catalyst. Gemini helps understand longer and more detailed searches. In the second quarter of 2026, shopping ads achieved a 20% improvement in showing highly relevant advertisements. AI Max has already been adopted by 500,000 advertisers, with AI-powered campaigns generating an average of 15% more conversions or value at a similar return on ad spend.
YouTube further strengthens GOOGL’s competitive position through its combination of connected TV, Shorts, creators and direct-response advertising. Continued innovation in AI-driven targeting, shoppable formats and Search monetization should help Alphabet capture a greater share of advertising budgets despite intense competition.
Alphabet expects AI-driven improvements in Search to continue supporting user and advertiser experiences. However, third-quarter growth will face tougher Search comparisons and a slight foreign-exchange headwind, particularly across Search and YouTube ads.
Price Performance and Valuation of RDDT and GOOGL
In the year-to-date period, shares of Alphabet have gained 11.6%, whereas Reddit stock has lost 29.4%. Alphabet’s outperformance can be attributed to its continued AI push across its search, YouTube and cloud computing platforms. An expanding focus on improving the enterprise footprint is expected to boost prospects.
The decline in RDDT can be attributed to choppy and declining search referral traffic, particularly late in the second quarter of 2026, which led to a slight decrease in daily active users and heightened volatility. Low visibility into external search trends also remains a headwind.
RDDT and GOOGL Stock Performance
Image Source: Zacks Investment Research
Valuation-wise, RDDT and GOOGL shares are currently overvalued, as indicated by Value Scores of D and C, respectively.
In terms of the forward 12-month Price/Sales, RDDT shares are trading at 7.5X, which is lower than GOOGL’s 8.32X.
RDDT and GOOGL Valuation
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for RDDT & GOOGL?
The Zacks Consensus Estimate for RDDT’s 2026 earnings is pegged at $5.27 per share, which has increased 0.95% over the past 30 days. This indicates a 101.15% rise year over year.
The Zacks Consensus Estimate for GOOGL’s 2026 earnings is pegged at $20.52 per share, which has increased by a penny over the past 30 days. This indicates an 89.82% year-over-year increase.
While both Reddit and Alphabet offer strong digital advertising growth prospects, RDDT appears better positioned for greater upside, supported by faster ad revenue growth and expanding advertiser adoption.
Despite its dominant advertising position, Alphabet faces intensifying competition, tougher Search comparisons and near-term foreign-exchange headwinds that could limit upside.
View the Zacks #1 Rank List
Image: Bigstock
RDDT vs. GOOGL: Which Digital Advertising Stock Has an Edge Right Now?
Key Takeaways
Reddit (RDDT - Free Report) and Alphabet (GOOGL - Free Report) are major players in the digital advertising space. While Reddit is an emerging social media platform gaining traction with community-driven advertising, Alphabet remains the dominant force in global search and digital ad markets.
Reddit or Alphabet — 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 second quarter of 2026, Reddit’s advertising revenues grew 64% year over year to $762 million, outpacing even its impressive total revenue growth of 61%. This growth is broad-based, with strength across various sales channels, including large customers, mid-market, and Small and Medium-sized Businesses (SMBs).
Reddit’s innovation in its ad stack is another key factor in strengthening its competitive edge. The launch and rapid adoption of Reddit Max, an AI-driven suite for ad automation and optimization, has delivered significant results. Advertiser usage of Max grew by more than 60% from the first quarter, and revenues from Max campaigns increased by more than 150%. Features like tailored creatives and dynamic product ads are helping brands achieve better outcomes, such as Lenovo’s 40% higher purchase value with Max campaigns compared to standard campaigns.
The company is also expanding its advertiser base and ecosystem, making it easier for businesses of all sizes to succeed on Reddit. Scaled channel revenues, which include mid-market and SMBs, doubled year over year, and active advertisers grew more than 70% in the second quarter of 2026. Integrations with platforms like Shopify and a growing ads API ecosystem are streamlining onboarding and campaign management, further fueling Reddit’s commercial momentum.
With ongoing investments in product innovation, user experience and ad technology, Reddit is poised to capture more advertising dollars and further strengthen its position in the digital ad market. For the third quarter of 2026, management expects revenues between $860 million and $870 million, representing 47% to 49% year-over-year growth.
The Case for GOOGL Stock
Alphabet is benefiting from strong momentum across its advertising business, supported by continued growth in Google Search and YouTube and deeper integration of Gemini across its ad infrastructure. Google advertising revenues increased 14.4% year over year to $81.63 billion in the second quarter of 2026. Google Search & other revenues jumped 17% to $63.27 billion, while YouTube advertising revenues increased 13% to $11.06 billion. Retail and finance were the biggest contributors to Search growth, while direct response and brand advertising supported YouTube.
Alphabet’s growing use of Gemini across its advertising infrastructure remains a key catalyst. Gemini helps understand longer and more detailed searches. In the second quarter of 2026, shopping ads achieved a 20% improvement in showing highly relevant advertisements. AI Max has already been adopted by 500,000 advertisers, with AI-powered campaigns generating an average of 15% more conversions or value at a similar return on ad spend.
YouTube further strengthens GOOGL’s competitive position through its combination of connected TV, Shorts, creators and direct-response advertising. Continued innovation in AI-driven targeting, shoppable formats and Search monetization should help Alphabet capture a greater share of advertising budgets despite intense competition.
Alphabet expects AI-driven improvements in Search to continue supporting user and advertiser experiences. However, third-quarter growth will face tougher Search comparisons and a slight foreign-exchange headwind, particularly across Search and YouTube ads.
Price Performance and Valuation of RDDT and GOOGL
In the year-to-date period, shares of Alphabet have gained 11.6%, whereas Reddit stock has lost 29.4%. Alphabet’s outperformance can be attributed to its continued AI push across its search, YouTube and cloud computing platforms. An expanding focus on improving the enterprise footprint is expected to boost prospects.
The decline in RDDT can be attributed to choppy and declining search referral traffic, particularly late in the second quarter of 2026, which led to a slight decrease in daily active users and heightened volatility. Low visibility into external search trends also remains a headwind.
RDDT and GOOGL Stock Performance
Image Source: Zacks Investment Research
Valuation-wise, RDDT and GOOGL shares are currently overvalued, as indicated by Value Scores of D and C, respectively.
In terms of the forward 12-month Price/Sales, RDDT shares are trading at 7.5X, which is lower than GOOGL’s 8.32X.
RDDT and GOOGL Valuation
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for RDDT & GOOGL?
The Zacks Consensus Estimate for RDDT’s 2026 earnings is pegged at $5.27 per share, which has increased 0.95% over the past 30 days. This indicates a 101.15% rise year over year.
Reddit Inc. Price and Consensus
Reddit Inc. price-consensus-chart | Reddit Inc. Quote
The Zacks Consensus Estimate for GOOGL’s 2026 earnings is pegged at $20.52 per share, which has increased by a penny over the past 30 days. This indicates an 89.82% year-over-year increase.
Alphabet Inc. Price and Consensus
Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote
Conclusion
While both Reddit and Alphabet offer strong digital advertising growth prospects, RDDT appears better positioned for greater upside, supported by faster ad revenue growth and expanding advertiser adoption.
Despite its dominant advertising position, Alphabet faces intensifying competition, tougher Search comparisons and near-term foreign-exchange headwinds that could limit upside.
Both Reddit and Alphabet currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.