Author:Select-Leading-4542

Translation: Deep Tide TechFlow

Recently, Reddit's stock market community r/stocks has sparked enthusiastic discussions— as AI infrastructure stocks represented by Nvidia (NVDA) complete their main upward wave, more and more investors are starting to focus on the application layer companies that truly convert AI into profits, believing a new rotation market is quietly unfolding.

The frequently mentioned targets in this round of discussions include:

Original post:

NVDA and all AI infrastructure stocks have clearly completed their significant rise.

I began to wonder if capital is finally rotating towards those companies that truly leverage AI to enhance their profit margins.

Currently focusing on RDDT, SNOW, NOW, and SHOP.

RDDT clearly occupies a core position as a data provider, and the fundamentals look indeed very strong. The crazy jump in SNOW after its earnings report indicates the market has very high expectations for its new AI products. NOW and SHOP are both vigorously integrating AI into their platforms— purely from a chart perspective, both appear to be displaying good rebound patterns.

What other targets do you have on your observation list that fit this logic? Are there any worth deeper research?

Some representative replies from the comments section:

DeathStar_81 (10 hours ago): RDDT is literally breaking out now. The fundamentals are too strong to suppress. 70% revenue growth, 90% profit margin, PEG ratio below 1.

Ambitious_Traffic530 (11 hours ago): Reddit has risen a lot these days, is it still worth buying now or wait for a pullback?

tobybells: Reddit has been oscillating in the same range—after dropping from 120-130, it consolidated around 140-150, then surged to 160-170. Buying at any position in this range is fine. I hold RDDT long term, 2000 shares, cost price 170, so you buying now is cheaper than me.

ShowerMotor (12 hours ago): Call me conservative, but I think the second wave is still semiconductors, the third wave is only the mega cloud vendors and Mag7... boring stuff. I plan to shift most of my positions to the Nasdaq 100 next year and hold until I don’t know when.

AloneStaff5051 (11 hours ago): Additional background: All LLM models are trained on Reddit data. Anthropic and Perplexity have not paid, and there is clearly an ongoing lawsuit against them.

PotatoAjacent104937 (12 hours ago): If you're thinking this way, Palantir should be on your list. I hold Palantir but feel their government contract adoption is slowing down. In the last earnings report, government revenue grew 84% year-on-year, and commercial revenue grew 133% year-on-year.

Last year felt like there were headlines about new Palantir contracts every day, but the numbers don’t lie!

Zipski577: Defense/AI spending increases every year, and Palantir's share is also growing every year. I used to think the commercial side was the biggest opportunity and that it was seriously overvalued, but after deep diving into government contracts and historical data for re-modeling, a target price above $200 looks very realistic.

Hoosier2016: META too. Their AI-assisted ad targeting is already very profitable.

🔴 Bullish camp summary: RDDT has the strongest logic in this wave

The discussion within the community about Reddit (RDDT) is most enthusiastic, with bullish views focused on its data moat—almost all mainstream Large Language Models (LLM) have used Reddit data for training, while companies like Anthropic and Perplexity have not paid, and related lawsuits are in progress. Supporters believe:

• Revenue grew 70% year-on-year, gross margin up to 90%, PEG ratio close to or below 1, and valuation is still severely undervalued
• As LLMs penetrate e-commerce scenarios, Reddit, as a "trust layer of real human feedback," will see its data value continue to rise
• The stock price is currently oscillating in the 140-170 range, and technical indicators show upward breakout signals

Discrepancy focus: How deep is Reddit's data moat?

Some investors hold a reserved attitude, arguing that: having a lot of data doesn’t equate to high quality, numerous new models have shifted to fine-tuning small language models (SLM) on existing datasets, the reliability of Reddit content itself is in doubt, and its bargaining power with large tech companies is overestimated.

For example:

TyrannosPyros (8 hours ago): I have completely sold out of RDDT because it has performed poorly, preventing me from investing more in AMD and TSMC. The data moat is severely overblown. Most new models are created by fine-tuning LLMs on existing datasets. Their ad revenue is good, but I don’t think they have much bargaining power with big tech companies.

Fireballsdude: I really don’t understand why some people think LLMs crawling Reddit’s existing datasets means the supply of fresh data isn't important anymore. LLMs won't just be enterprise-oriented; they will also do e-commerce as another monetization source for these huge investments.

🟢 Other popular targets perspective

• META: AI-assisted ad targeting is significantly improving monetization efficiency; some investors believe the market is punishing it excessively due to the failure in the metaverse and high CapEx, currently presenting undervaluation opportunities
• Palantir (PLTR): The latest earnings report shows government revenue up 84% year-on-year, and commercial revenue up 133% year-on-year. The numbers are strong, but some investors perceive a mismatch with news hype
• Snowflake (SNOW): Experienced a single-day surge of over 30% after earnings report, AI data products received market recognition, but some lament “got in too late”
• Semiconductors and mega cloud vendors: Some old-school investors think the second wave is still semiconductors, and the third wave is only for Google, Apple, and other Mag7, recommending to buy Nasdaq 100 directly and hold long term

Professional perspective, how does the options market view this wave of rotation?

A user in the comments section provided a more professional analysis from the volatility surface perspective: infrastructure stocks (like Nvidia, Dell) showed volatility compression after their earnings reports; the market has reached a consensus on CapEx expansion direction;

While the uncertainty of application layer targets (RDDT, SNOW, SHOP) is two-way, the implied volatility structure has not tilted upwards like infrastructure stocks. Therefore, rather than using options to leverage on application layers, it might be cleaner to directly buy these stocks.

This discussion reflects the core divide in the current market: The money from AI infrastructure has been made, where is the next ten-fold?

Most participants tend to believe that the monetization logic of the application layer is gradually clarifying, but catalysts have not fully kicked in yet. RDDT, due to its unique data assets, has become the most关注 target, while META and Palantir have gained more fundamental support due to their established AI monetization capabilities.