Reddit Strikes $60M Deal with Google for AI Training

What You Need To Know

Reddit has reportedly signed a $60 million per year deal with Google to provide its content for training the tech giant's artificial intelligence models. The move comes as Reddit, which is preparing for an IPO, seeks to generate new revenue streams in the face of competition from platforms like TikTok and Facebook.

Read: Reddit Eyes Public Debut, Plans IPO in March

This marks Reddit's first reported deal with a major AI company, as the social media platform had previously announced plans to charge companies for access to its content distribution system. The agreement with Google highlights the growing trend of AI model makers securing deals with content owners to expand the diversity of their training data. Reddit is expected to file for its IPO this week, with the company aiming to sell around 10% of its shares in the offering.

Why This Is Important for Retail Investors

1. Increased Revenue Potential: The partnership between Reddit and Google highlights Reddit's efforts to diversify its revenue streams, which can benefit retail investors. By generating additional income, Reddit may have the financial stability to invest in platform improvements and expand its user base, potentially increasing shareholder value.

2. Strategic Expansion: Collaborating with a tech giant like Google signifies Reddit's focus on evolving its business model beyond traditional advertising revenue. This strategic move may indicate a long-term commitment to innovation and growth, which can be attractive to retail investors looking for promising investment opportunities.

3. AI Advancements: Google's utilization of Reddit's content for training its AI models has implications for retail investors. It demonstrates the importance of AI in the technology and social media sectors, highlighting the potential for advancements that could drive future industry growth and profitability.

4. IPO Prospects: Reddit's imminent IPO filing presents an opportunity for retail investors to participate in the company's growth and potentially benefit from its success. The deal with Google may enhance Reddit's appeal to potential IPO investors, making it an intriguing investment option for those interested in social media and technology stocks.

5. Industry Competition: The intensified competition between Reddit, TikTok, and Facebook for advertising dollars underscores the evolving landscape of digital platforms. Retail investors should consider the impact of this competition on market dynamics and assess the potential for market share shifts, which can influence investment decisions in related companies.

How Can You Use This Information?

Here are some of the investing ideas that can be explored using this information:

Growth Investing

Growth investing focuses on stocks of companies expected to grow at an above-average rate compared to other stocks in the market; learn more in our article titled 'What is Growth Investing?'.

The partnership between Reddit and Google signifies Reddit's strategic growth potential, making it an interesting consideration for investors looking for companies with promising expansion prospects.

Thematic Investing

Thematic Investing selects assets based on projected trends or themes believed to offer growth opportunities.

The collaboration highlights the importance of AI in the technology and social media sectors. Investors interested in thematic investing around AI advancements may find this partnership compelling.

Innovation-Focused Investing

Innovation-focused investing seeks out companies that are leaders in technological advancement, offering potential for significant growth as they develop new products and services.

Reddit's deal with Google demonstrates its commitment to innovation and staying at the forefront of industry trends. Investors seeking opportunities in innovative companies could find Reddit appealing.

Sector Rotation

Sector Rotation is the practice of shifting investment capital from one industry sector to another to take advantage of the economic cycle.

This collaboration between Reddit and Google is relevant for investors focusing on the technology and social media sectors. It may impact sector rotation strategies and warrant consideration for sector-specific portfolio adjustments.

Ethical Investing

Ethical investing prioritizes a company's social and environmental impact, aligning investments with the investor's personal values.

While not the primary focus of this information, investors interested in ethical considerations may want to analyze Reddit's content policies and alignment with responsible practices when evaluating the potential investment opportunity.

Read What Others Are Saying

Reuters: Reddit in AI content licensing deal with Google

What you should read next:

• AMZN Joins Dow Jones Industrial Average (DJIA), Replacing WBA Stock

• OXY Stock: Occidental Petroleum Explores Sale of Western Midstream Partners

• FTC and States Set to Sue Kroger (KR) and Albertsons (ACI) Over Merger

• Nvidia's Sales Forecast Sends NVDA Stock Soaring

• RIVN Stock: Rivian Slashes Workforce and Lowers Production Guidance

• Intel Expects to Overtake TSMC in Advanced Chip Manufacturing

Popular ETFs

Some investors prefer to invest in stocks via an exchange-traded fund for ease and reduced risk. Some popular ETFs include the following:

• Large-Caps: Vanguard Mega Cap ETF (MGC)

• Mid-Caps: Vanguard Mid-Cap ETF (VO)

• Small-Caps: Vanguard Small-Cap ETF (VB)

• Growth: iShares Core S&P U.S. Growth ETF (IUSG)

• Value: iShares Core S&P US Value ETF (IUSV)

• Emerging Markets: Vanguard FTSE Emerging Markets ETF (VWO)

• Developed Markets: Vanguard FTSE Developed Markets ETF (VEA)

• Agg Bonds: iShares Core U.S. Aggregate Bond ETF (AGG) - This ETF provides broad exposure to U.S. investment-grade bonds.

• TIPS: iShares TIPS Bond ETF (TIP) - This ETF offers exposure to U.S. Treasury Inflation-Protected Securities (TIPS). TIPS are government bonds specifically designed to help protect against inflation.

• REITs: Vanguard Real Estate ETF (VNQ)

• Commodities: iShares S&P GSCI Commodity Indexed Trust (GSG)

• Energy: Energy Select Sector SPDR Fund (XLE)

• Clean Energy: Invesco Winderhill Clean Energy ETF (PBW)

• Obesity and Heart Disease: Tema Cardiovascular and Metabolic ETF (HRTS)