Reddit Stock Could Jump If Google AI Search Kills Online Media Traffic
The AI Search Revolution and Its Discontents
Google's aggressive pivot towards AI-powered search, marked by features like AI Overviews, is fundamentally reshaping how users find information online, posing an existential threat to traditional web traffic models. This shift from a search engine to an answer engine aims to deliver instant, synthesized responses, potentially slashing the need for clicks to external sites and crippling ad revenue for digital publishers.
In this turbulent landscape, Reddit stands at a curious crossroads. While its stock faces pressure from concerns over traffic diversion, its foundation of authentic, user-generated content could become its greatest asset if it can weather the initial storm better than conventional media outlets.
Reddit's Symbiotic Dance with Google
Reddit's growth has been inextricably linked to Google Search, with a significant portion of its users arriving via queries seeking answers within its communities. This symbiotic relationship means any algorithmic change by Google sends ripples through Reddit's traffic metrics. Management has historically downplayed this dependency, assuring investors during earnings calls that the company has successfully navigated past updates and that core user engagement remains stable.
However, the introduction of AI Overviews in 2024 represented a paradigm shift, not merely another algorithm tweak. This feature uses generative AI to pull and condense information from sources like Reddit directly onto the search results page. The reassurance from executives that they were "not worried" and saw "no revenue impact" is now under intense scrutiny, as the dynamics of user discovery are being rewritten.
Zero-Click Searches: The Silent Traffic Killer
The core mechanism threatening Reddit is the rise of the "zero-click search." When AI Overviews provide a concise answer to a query by synthesizing Reddit threads, users may get what they need without ever clicking through to the site. This directly attacks the page views and session durations that underpin advertising revenue.
Quantifying the Threat
Data from SEO platforms like SERanking indicates AI Overviews appear for roughly 7-9% of searches, a reduction from earlier, more aggressive rollouts. More tellingly, Reddit has fallen out of the top ten most-cited domains in these AI summaries. While the frequency may have dipped, the structural incentive for Google to provide answers, not just links, remains a permanent headwind for referral traffic.
Lawsuit Allegations: Downplaying the Downpour
The shareholder lawsuit filed in June 2025 crystallizes the investment risks. It alleges Reddit's leadership failed to disclose that Google's AI changes were causing a unique, material reduction in traffic by enabling zero-click searches. The complaint argues that management knew increased search volume for "Reddit" was deceptive—users were finding answers on Google, not seeking to visit the site—yet publicly touted business stability and reliable growth.
This case is fascinating because it highlights a secondary AI risk: the threat from a supplier's innovation. The risk to Reddit didn't stem from its own AI use but from Google's, which supplies a critical resource—user traffic. It underscores how corporate disclosures must evolve to address these interconnected technological disruptions.
Data Tells a Different Story: AI Overviews in Retreat?
Recent analytics present a nuanced picture. Following widespread criticism of inaccurate AI answers, Google has seemingly scaled back AI Overviews' prominence. Citations from Reddit have decreased within these summaries. This pullback might offer a temporary respite, but it doesn't negate the long-term strategic direction.
Google is clearly committed to an AI-augmented future. Features like AI Overviews are most prevalent in categories like Technology and Social Media, precisely where Reddit is strong. The data suggests a recalibration, not a retreat, meaning platforms must prepare for a reality where organic click-through rates are perpetually under pressure.
The Analyst Perspective: Downgrades and Concrete Doubts
The financial markets have rendered a verdict of concern. In May 2025, analysts from Wells Fargo and Baird downgraded Reddit's stock, citing Google's AI features as "permanent" disruptions to user traffic that would ultimately hurt advertising revenue. These moves followed a third consecutive quarter of slowing daily active user (DAU) growth, contradicting management's upbeat medium-term outlook.
The stock price decline following these downgrades signals that investor patience for optimistic narratives is thinning. When analysts perceive a fundamental business model challenge, it creates a credibility gap that Reddit must bridge through demonstrated performance, not just reassurance.
Reddit's Resilience: The User-Generated Content Advantage
Here lies the potential for a surprising stock jump. If AI search devastates traffic to generic content farms and media sites, Reddit's unique value proposition could shine brighter. Its platforms host real-time discussions, nuanced debates, and community-verified information that an AI summary cannot fully capture. The depth, authenticity, and interactive nature of this content are its moat.
Users seeking contextual understanding, diverse opinions, or direct community interaction will still have a compelling reason to visit Reddit directly. This could allow Reddit to capture a larger share of engaged, loyal users even as overall discovery channels fragment, potentially leading to more robust and valuable advertising inventory.
Looking Ahead: Navigating the AI-Forced Evolution
The path forward for Reddit involves strategic adaptation. It must deepen direct user engagement, potentially leverage its data through new AI partnerships of its own, and innovate its ad products to value quality attention over mere traffic volume. The companies that survive the AI search shift will be those that offer something irreplaceable by a summary.
If Reddit can demonstrate that its community-driven ecosystem is more resilient to zero-click searches than the broader online media landscape, investor sentiment could swing powerfully positive. The stock's jump would then be a bet on the enduring human need for connection and context—a need that Reddit is uniquely positioned to fulfill in an age of automated answers.