Reddit RDDT and Alphabet GOOGL are major players in the digital advertising space. While RDDT is an emerging social media platform gaining traction with community-driven advertising, GOOGL 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 first quarter of 2026, Reddit reported total revenues of $663 million, up 69% year over year, with advertising revenues growing even faster at 74% to $625 million. This marks Reddit’s seventh consecutive quarter of revenue growth of more than 60%, underscoring the sustained momentum in its ad business.

Growth can be attributed to the company’s expanding portfolio, strong user engagement, including rising daily and weekly active users, gains in Average Revenue Per User and the expansion of advertiser tools such as Dynamic Product Ads (DPAs), Reddit Pixel and CAPI.

In the first quarter of 2026, DPAs have 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 artificial intelligence (AI)-powered tools remain noteworthy. The launch and adoption of Reddit Max, an automated, AI-powered campaign tool, enabled advertisers to achieve a 17% reduction in cost per action and a 25% increase in conversion rate in the first quarter of 2026. About 50% of Max campaign advertisers now use AI-powered creative features, and brands like Cozy have reported a 35% higher ROAS and a 28% lower cost per acquisition with these tools.

The Case for GOOGL Stock

Alphabet’s leadership in AI and strong partnerships with major retailers and tech companies position the company for continued growth and further upside in the digital advertising market. In the first quarter of 2026, Google’s advertising revenues increased 15.5% year over year to $77.25 billion and accounted for 70.3% of total revenues.

A key driver behind this surge is Alphabet’s aggressive integration of advanced AI models, particularly Gemini, across its entire ads infrastructure. These AI enhancements have significantly improved ad relevance and user intent understanding, allowing Alphabet to match ads more precisely to user queries, even for longer, more complex searches that were previously difficult to monetize.

In the first quarter of 2026, the company announced that Google Maps, with AI-driven improvements, has led to a nearly 10% increase in user engagement with promoted pins, while Smart Bidding powered by Gemini has enabled advertisers to achieve greater precision and performance.

Alphabet’s partnership with Walmart remains noteworthy. In June 2026, the company partnered with Walmart Connect to integrate Walmart’s first-party shopper audiences into Display & Video 360, starting with YouTube campaigns. Advertisers can now target high-intent Walmart shoppers and measure how video ads drive online and in-store sales through closed-loop measurement, improving campaign effectiveness and return on ad spend.

Price Performance and Valuation of RDDT and GOOGL

In the year-to-date period, shares of Alphabet have gained 12.6%, whereas Reddit stock has lost 12.6%. 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.

Despite a robust portfolio, Reddit suffers from a challenging macroeconomic environment and seasonal volatility. Stiff competition in the digital advertising market poses a significant challenge for Reddit.

RDDT and GOOGL Stock Performance

Valuation-wise, RDDT and GOOGL shares are currently overvalued, as indicated by Value Scores of F and D, respectively.

In terms of the forward 12-month Price/Sales, RDDT shares are trading at 10.14X, which is higher than GOOGL’s 9.01X.

RDDT and GOOGL Valuation

How Do Earnings Estimates Compare for RDDT & GOOGL?

The Zacks Consensus Estimate for RDDT’s 2026 earnings is pegged at $4.83 per share, which has been unchanged 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 GOOGL’s 2026 earnings is pegged at $14.32 per share, which has increased by a couple of pennies over the past 30 days. This indicates a 32.47% year-over-year increase.

Alphabet Inc. Price and Consensus

Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote

Conclusion

While both Reddit and Alphabet stand to benefit from the booming digital advertising market, Alphabet’s AI leadership, dominant digital advertising ecosystem and stronger earnings visibility make it a stronger pick than RDDT.

Despite RDDT’s strong advertising growth and expansion of its AI-powered ad platform, its competitive pressures and higher volatility make it a riskier investment.

Currently, Alphabet has a Zacks Rank #1 (Strong Buy), making the stock a stronger pick than Reddit, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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