Reddit (RDDT) could have further upside as the rapid adoption of artificial intelligence makes authentic, human-generated content more valuable, according to Needham. The brokerage maintained its ‘Buy’ rating on the social media platform and reiterated a $300 price target, implying nearly 50% upside from Friday’s closing price.

Shares of Reddit gained 0.5% after-hours on Friday, after ending the regular session with a loss of 2.48%.

Human Content Could Become Reddit’s Biggest Strength

Needham said Reddit’s vast repository of human conversations gives it a competitive advantage as AI-generated content becomes more widespread.

“RDDT’s core asset becomes more valuable over time, because it is 100% human dialog and information, at scale, which is a competitive advantage in an environment of proliferating algorithms,” said the analyst in a note to clients, according to CNBC.

The analyst added that Reddit provides “a human layer of authentication and advice,” which many consumers seek before acting on recommendations generated by large language models or algorithms.

AI Adoption Could Increase Demand For Reddit

The use of generative AI tools such as ChatGPT has surged in recent years. According to the Pew Research Center, around half of U.S. adults now report using AI chatbots, a significant increase from 2024. The survey also found that about one in four respondents use generative AI tools every day.

As AI-generated content becomes more prevalent, Needham believes authentic, human-produced discussions could become harder to find, making Reddit a more valuable destination for users seeking non-AI insights.

RDDT Stock: What Stocktwits Retail Sentiment Says

On Stocktwits, retail sentiment for RDDT was ‘bearish,’ while message volume was ‘normal’ at the time of writing. Over the past seven days, message volume around the stock has surged by 133%, while its retail watcher base has risen 0.1% in the same period.

Needham’s positive stance aligns with broader Wall Street sentiment. According to Koyfin data, of the 32 analysts covering Reddit, 21 have a ‘Buy’ or ‘Strong Buy’ rating on the stock, while 10 have a ‘Hold’ rating. The 12-month average target on the stock is $225.92, representing a potential upside of nearly 13% from the last close.

The has lost 13% year-to-date.