Reddit Stock Plunges 30% as Google's AI Search Hits Traffic and User Growth

Reddit shares fell roughly 30% after reports that Google's AI-powered search features are diverting traffic away from Reddit and slowing its user growth. The core transmission channel is the market's repricing of Reddit's growth outlook: its valuation rests heavily on user acquisition and logged-in engagement, and a search intermediary that answers queries before users click through threatens both the ad inventory and the top-of-funnel traffic that feed it. Reddit is the most directly exposed name, given its reliance on search referrals for new and returning users, while peers dependent on web-search discovery face secondary pressure on sentiment. For Alphabet, the headline cuts both ways: the same AI search product that pressures third-party content platforms reinforces Google's position as the gateway to information, though investors will weigh any associated costs of content licensing and AI infrastructure against those gains. The next catalyst to watch is Reddit's upcoming quarterly earnings and any disclosed trends in logged-out versus logged-in traffic, which will show whether the decline in search referrals is measurable in reported user metrics.

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