Reddit recently made its much-anticipated debut in the public market, causing quite a stir among investors. The social media platform, known for its unique user anonymity and diverse range of user-generated content, saw its stock price surge by almost 50% following the initial public offering.
While Reddit primarily generates revenue from advertising like most social media companies, it has also identified a promising opportunity in the realm of artificial intelligence (AI). By leveraging its vast repository of real-time human conversations spanning various topics, Reddit aims to train large language models (LLMs), such as OpenAI’s ChatGPT, for AI applications.
According to Reddit’s CEO Steve Huffman, the company’s data advantage and intellectual property hold significant value in training future LLMs, positioning Reddit as a key player in the AI training data market. The company forecasts substantial revenue growth from data licensing, with an estimated $66.4 million expected in 2024.
Despite Reddit’s potential in AI, some skeptics question the extent of this opportunity. While Reddit’s data archive is indeed valuable for training AI models, it faces competition from other sources like news organizations and content websites. The market’s response to stocks like The New York Times Company, which also possess valuable data for AI training, indicates that investors may not view AI training data as a transformative opportunity just yet.
In conclusion, Reddit’s foray into AI training data presents a promising venture for the company, but the extent of its success remains to be seen amidst competition and evolving market dynamics. Investors are advised to carefully assess Reddit’s AI potential alongside its financial performance to gauge the stock’s true value in the long run.
