Reddit Signals AI Search as Its Next Major Revenue Engine

Reddit reported fourth-quarter results on Thursday that beat Wall Street estimates on every metric, but the number that matters most for the AI industry wasn’t in the earnings: Reddit Answers, the company’s AI-powered search feature, grew from 1 million weekly users in Q1 2025 to 15 million by year-end — a 15x increase that Reddit’s leadership framed as the beginning of a much larger opportunity.

Revenue hit $726 million for the quarter, up 70 percent year over year, with net income of $252 million. For full-year 2025, Reddit crossed $2.2 billion in revenue and $530 million in net income. The company also announced a $1 billion share repurchase program.

But CEO Steve Huffman steered the earnings call toward search. Over 80 million people now search directly on Reddit every week, up from 60 million a year ago, and the company told investors that AI search represents “an enormous market and opportunity” that is not yet monetized.

Reddit Answers and the Search Opportunity

Reddit Answers launched in late 2024 as an AI layer on top of Reddit’s existing search, synthesizing responses from relevant posts, comments, and community discussions into conversational answers. The feature now supports multiple languages and is piloting dynamic agents alongside search results that include media beyond text.

The product addresses a user behavior that Google has struggled with for years. Millions of people already append “reddit” to their Google searches because they want answers from real humans rather than SEO-optimized content farms. Reddit Answers brings that intent in-house, letting users search Reddit’s corpus directly through an AI interface instead of routing through Google.

The strategic significance is twofold. First, Reddit captures search traffic it currently shares with Google — and the advertising revenue that comes with it. Search ads carry some of the highest CPMs in digital advertising, and Reddit’s search inventory is currently unmonetized. Second, AI-synthesized answers keep users on Reddit longer, generating more engagement data that improves both ad targeting and the AI models themselves.

Reddit also announced at CES the public beta of Reddit Max, an AI-powered campaign platform that gives advertisers automated campaign creation and optimization. The combination of AI search and AI-powered ad tools suggests Reddit is building a self-reinforcing system: better search attracts more users, more users generate more data, better data improves ad performance, and better ad performance funds more AI development.

Reddit Answers (Reddit)

The Competitive Field

Reddit is entering an AI search market that’s already crowded. Google has been integrating AI Overviews into its search results, summarizing web content with AI-generated answers. Perplexity has built a dedicated AI search engine with millions of users. OpenAI’s ChatGPT, now with advertising on its free tier and an expanding app ecosystem, handles hundreds of millions of search-like queries weekly.

Reddit’s differentiator is its data. The platform hosts 20 years of human-generated discussion across millions of communities. That corpus is uniquely valuable for AI because it contains authentic opinions, product reviews, troubleshooting guides, and recommendations from real users — exactly the kind of content that AI models trained on web crawls tend to reproduce poorly.

This data advantage explains why Google, OpenAI, and others have signed licensing deals with Reddit to train their models. Reddit is now asking a logical follow-up question: if our data is valuable enough for other companies to pay for, why not build our own AI search product and capture that value directly?

The company also announced it will stop distinguishing between logged-in and logged-out users starting in Q3 2026, using AI and machine learning to personalize the experience for everyone. The move could significantly expand Reddit’s addressable audience — logged-out visitors have historically seen a less engaging, less monetizable version of the site.

For the broader AI chatbot market, Reddit’s move introduces an unusual competitor. Unlike Perplexity or ChatGPT, Reddit isn’t building a general-purpose AI assistant. It’s building AI search specifically for the kind of authentic, community-driven content that other platforms can’t replicate. If Reddit Answers can scale from 15 million weekly users to the 80 million already searching on the platform, it becomes a significant player in AI search without ever competing head-to-head with general-purpose models.

Reddit guided Q1 2026 revenue between $595 million and $605 million, representing 52-54 percent growth. The stock initially dipped after earnings despite beating estimates — a sign that investors may be pricing in AI search revenue that hasn’t materialized yet. The gap between Reddit’s AI search ambitions and its current monetization of those ambitions is where the real story will play out over the next several quarters.