Shares of SoundHound AI (NASDAQ:SOUN) are on investors’ radars on Monday. That’s as SOUN stock is up about 14% so far on the day. At session highs, shares were up more than 25% and hit a high of $4.59.
While that briefly eclipsed last week’s high of $4.44, the stock hasn’t been able to stay above that level intraday. That said, SOUN stock is hitting its highest level since February.
One motivating factor?
The realization that SOUN stock will be included in the Russell 2000 and the Russell 3000 indices. From the release:
“As part of the 2023 annual reconstitution of the Russell indexes, the company has been selected to be included in the Russell 2000® and broad-market Russell 3000® Indexes effective after the U.S. market closed on June 23, 2023.”
For a company with a sub-$1 billion market capitalization, this type of inclusion is important. As SoundHound co-founder and CEO Keyvan Mohajer said:
“SoundHound’s inclusion in the Russell represents another significant milestone in our journey as a public company, significantly broadening our visibility and awareness among the investment community. It’s also indicative of our strength and deep expertise in voice AI, a technology that is rapidly changing the way we live and work.”
What’s Next for SOUN Stock?
For those unaware of what SoundHound does, the company specializes in conversational intelligence using artificial intelligence (AI) solutions that allow businesses to communicate with their customers.
We’ve already seen what can happen to AI stocks when they find some momentum. Whether that’s in mega-cap tech like Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT) or smaller companies like C3.ai (NYSE:AI), there can be serious potential.
With SOUN stock being included in the Russell 2000 and Russell 3000, bulls are hoping for more institutional support. They’re also hoping that the stock becomes more well-recognized with investors and has the potential to rally, with AI being its main catalyst.
Of course, just because SoundHound is being included in the Russell 2000 and Russell 3000 doesn’t guarantee anything. While it does mean SOUN is more likely to be taken seriously by the investment community; it doesn’t mean investors will flock to the stock.
On the plus side, SoundHound has some excellent growth forecasts for both earnings and revenue. Further, the company has greatly improved its balance sheet over the last quarter.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
