Okta Inc. (NASDAQ: OKTA) saw its stock surge 5.16% in pre-market trading on Tuesday, building on the momentum from the previous day's 5.45% gain. The rally is primarily driven by the announcement of Okta's inclusion in the S&P MidCap 400 index and the launch of a new AI security product.

S&P Dow Jones Indices revealed that Okta will replace Berry Global Group Inc. (NYSE: BERY) in the S&P MidCap 400 index, effective prior to the opening of trading on Thursday, May 1. This inclusion is expected to boost demand for Okta shares, as index funds and other institutional investors adjust their portfolios to reflect the change. According to Stephens, passive funds may need to purchase approximately 18.4 million OKTA shares, representing about 6 days of buying demand based on the stock's 3-month average daily trading volume.

Adding to the positive sentiment, Okta recently launched Auth for GenAI, a new offering within its Auth0 Platform. This product allows developers to integrate secure identity solutions into AI applications, addressing growing concerns over data protection in the rapidly evolving AI landscape. The move positions Okta at the forefront of AI security, a sector gaining increasing attention from investors. Furthermore, Okta's recent financial performance has bolstered investor confidence, with the company reporting a significant revenue increase to $2.61 billion and achieving profitability for the fiscal year ending January 31, 2025.