Reddit Inc. ( RDDT ) shares are trading higher Tuesday, continuing momentum from Monday when the company announced two new AI-driven advertising tools aimed at enhancing its platform’s appeal to brands. The rally also appears to be supported by recent institutional developments and broader optimism around Reddit’s data strategy.

What To Know: On Monday, Reddit ( RDDT ) introduced "Reddit Insights" and "Conversation Summary Add-ons," two features designed to help advertisers better understand and participate in Reddit's ( RDDT ) unique community-based environment. Reddit Insights provides real-time analysis of user discussions and trending topics, enabling brands to tailor campaigns more effectively. The Conversation Summary Add-ons allow selected user comments to appear under promoted posts, giving brands a curated and presumably supportive context around their ads.

The announcement comes amid tightened ad budgets across the industry, with agencies like WPP Media recently lowering their global ad revenue forecasts. As advertisers demand clearer ROI in uncertain conditions, Reddit's ( RDDT ) focus on AI tools could be seen as an attempt to offer more data-driven value to potential buyers.

Reddit ( RDDT ) is also gaining increased exposure in Google’s AI-generated search summaries, now reportedly the second most cited source behind Quora, according to Semrush. This stems in part from Reddit's ( RDDT ) $60 million licensing deal with Google last year. However, that visibility comes with a trade-off as many users now access Reddit ( RDDT ) content without clicking through to the platform or logging in, limiting Reddit's ( RDDT ) ability to monetize through ads.

CEO Steve Huffman acknowledged during the company's May earnings call that deeper integration with Google’s AI tools could negatively affect site traffic, even as Reddit ( RDDT ) projected stronger-than-expected second-quarter revenue.

Reddit ( RDDT ) shares may also be seeing some additional momentum as the company is set to join the widely held Russell indexes at the end of the month, a move that could drive increased demand from index-tracking funds.

Reddit ( RDDT ) will be added to the Russell 3000 index at the close of business June 27. In addition, Reddit ( RDDT ) will also be automatically added to either the Russell 2000 or Russell 1000 index.

RDDT Price Action: Reddit ( RDDT ) shares were up 5.11% at $132.55 at the time of publication Tuesday, according to Benzinga Pro.

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