In a recent interview at the Wall Street Journal’s Tech Live 2024 event, Reddit CEO and co-founder Steve Huffman discussed the integral role of the platform in shaping artificial intelligence. “The AI has to come from somewhere,” Huffman explained, asserting that the essence of artificial intelligence stems from genuine human intelligence found on Reddit. He emphasized that the diverse and ever-evolving content on Reddit significantly contributes to training major foundation models due to its breadth of colloquial language on a wide range of topics.
Founded in San Francisco in 2005, Reddit allows registered users to submit and share various forms of content—including links, text posts, images, and videos—while other users vote on these submissions. Posts are categorized into user-created boards known as “communities” or “subreddits.”
Huffman expressed concerns about a perceived decline in overall internet content quality as AI-generated materials become more prevalent. “This paradox makes Reddit stand out as a hub for authentic human content that is utilized in AI training,” he stated. The training of AI models has been a contentious topic, particularly in light of a recent movement opposing the unlicensed use of creative works. On October 22, a coalition of thousands from the creative industries—including musicians, authors, and actors—signed a statement asserting that such practices threaten their livelihoods and should not be allowed.
Amid these challenges, Huffman indicated that Reddit must navigate its value proposition while ensuring sustainable submissions to the platform. “We’ve been getting scraped every which way,” he noted, highlighting the ongoing struggle to protect content amid growing competition in the digital landscape.
Earlier this year, Reddit struck a significant $60 million deal with Alphabet’s Google, permitting the search giant to utilize posts from the platform for AI training and to enhance services like Google Search. “Our collaboration with Google will facilitate easier discovery and engagement with relevant content and communities on Reddit,” the company stated.
In addition, Reddit partnered with OpenAI in May, enabling the AI company to leverage Reddit’s data for its ChatGPT model, which rapidly gained popularity after its November 2022 launch.
Following these developments, several investment firms have updated their price targets for Reddit shares. Roth MKM increased its target from $66 to $89 on October 23 while maintaining a buy rating, citing ongoing contracts with Google and OpenAI that promise significant annual recurring revenue. B. Riley also raised its target from $75 to $87, emphasizing the company’s expected sales growth driven by an increase in daily active users and licensing revenue.
Jefferies lifted its target for Reddit shares to $100 from $90, also sustaining a buy rating. The firm favors companies with a focus on high-income consumers or those nearing market inflection points, naming Zillow as its top pick in the U.S. internet sector, followed by Uber as its top large-cap selection.
As Reddit continues to navigate the complex intersection of AI training and content quality, its strategic partnerships and focus on maintaining human-generated content may well dictate its future in the evolving digital landscape.
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