Since going public in 2024, Reddit (RDDT) has positioned itself as a wellspring of authentic human content — digital fuel for data-hungry AI models. What better place to learn how to sound like and communicate with people than the seemingly endless discussion threads of almost any topic imaginable?

So it followed. Reddit, through lucrative licensing deals, positioned itself as both a vibrant hub for people and a vital training ground for machines.

More from Yahoo Scout How do AI licensing deals conflict with Reddit's ad business? What percentage of Reddit's revenue comes from advertising versus AI? How is Reddit's S&P 500 inclusion affecting its stock? What are the risks of Reddit's dual AI and advertising strategy?

And now after two years, the company is joining the S&P 500 next week, a move that has prompted a double-digit gain after a rough year, so far as fund managers tracking the index move to match its inclusion in their portfolios.

But Reddit still has yet to figure out its biggest challenge, deciding which parts of its strategy are complementary and which are at odds.

Mixing LLM partnerships with ads has worked well. It offered some revenue diversity and reintroduced Reddit as a unique AI player, as most media and social media companies — social media very much included — are valued fairly singularly for their advertising potential.

But this opportunity has kicked off an existential struggle. Reddit still gets more than 90% of its revenue from ads. So there's a massive amount of risk in fiddling and potentially devaluing that legacy business, which worries its executives.

As EVP of monetization Roelof van Zwol put it in Cannes to Digiday, just how much its AI deals might devour its ad business is "definitely something that we're intensely debating."

Meanwhile, Wall Street has given the company the cold shoulder when it ran out of AI licensing deals to announce, sending the stock down double-digits year to date. Even as the company's ad revenue continues to expand, alongside its broader strategy to vastly increase its user base and massive clout in the marketing world, Wall Street's primary concern (you guessed it) remains its AI strategy.

There's an argument, one that I made a few years ago, that Reddit can't please the robots and its users in the long run, that selling its treasured repository of speech to get in on the LLM action was an act of self-sabotage.

If forums and universities and media outlets sell their archives and digital libraries to improve AI bots, wouldn't they hasten their own replacement, or diminish their cultural standing and ability to appeal to knowledge-seeking people?

For Reddit, it's hard to claim to be a refuge from synthetic garbage and regurgitated summaries while also running a business that perpetuates them. (One famous theory postulated that the internet may turn into bots talking to each other, and this seems to be actually happening. It's not hard to imagine it coming to Reddit itself.)