Can Reddit (RDDT) Sustain Its Momentum? Needham Thinks So

• StockStory Top Pick RDDT -5.90%

Reddit, Inc. (NYSE:RDDT) is one of the 10 Trending AI Stocks According to Analysts. Reddit has recently emerged as Needham’s Top Pick for 2026. On February 9, the firm’s analyst Laura Martin reiterated a Buy rating on the stock with a $300.00 price target. RDDT’s Top Pick ranking is supported by execution excellence, rapid margin expansion, and deep community moat.

The company reported its fourth-quarter 2025 financial results last week, posting revenues of $725.6 million for Q4 2025, a 70% year-over-year increase and beating Needham’s estimate by 9%.

Its adjusted EBITDA reached $327 million, up 112% year-over-year and 16% above analyst’s expectations. Non-GAAP earnings per share came in at $1.72, a 99% year-over-year increase and exceeding the firm’s estimate by 18%.

The 70% rise in revenues, the firm highlighted, were driven by 75% year-over-year ad revenue growth, with average revenue per user (ARPU) up 44% and user growth of 18%.

It has highlighted Reddit as its top pick for 2026 based on the platform’s strategic position with “100% human-created content.” This is a factor that becomes more valuable and differentiated as AI language models proliferate.

Needham also acknowledged Reddit’s “execution excellence” with over 60% revenue growth for the past six quarters.

“Our Take RDDT is our top pick for 2026, based on: Strategic position with 100% human-created content, which becomes more differentiated and valuable as LLM bots multiply; Execution excellence, with >60% rev growth for the past 6 quarters, ad revs up 75% in 4Q25, optionality upside from LLM licensing revs and rapid margin expansion, and, Difficulty in replicating a human community like RDDT today, creates a deep moat.”

Reddit, Inc. (NYSE:RDDT) is a social media platform that leverages AI to strengthen search functionality and improve user engagement.

While we acknowledge the potential of RDDT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.