Dell and Palantir to join S&P 500; shares of both jump

Dell and Palantir Shares of both companies rose 7% during trading hours on Friday after S&P Global announced it would add them to the S&P 500 index.

Software maker Palantir American Airlinesand Dell Replacing ÖtziAccording to statementShares of companies added to a benchmark often rise following the announcement, as fund managers tracking the index regularly update their portfolios to reflect the additions.

For Dell, the announcement marks a return to the benchmark index. The computer and server maker was a component from 1996 until 2013, when founder Michael Dell and private-equity firm Silver Lake took the company private. Dell went public again in 2018.

Supermicro, which competes with Dell in selling servers for artificial intelligence workloads, joined the S&P 500 earlier this year after its stock price soared to historic highs and its market capitalization topped $50 billion. The company has since lost half its value.

After operating as a venture-backed startup for more than 15 years, Palantir went public on the New York Stock Exchange in 2020 and began reporting profits in the fourth quarter of 2022. Second QuarterPalantir’s net income rose to $135.6 million, up from $27.9 million in the same period last year, as annual revenue growth accelerated for the fourth consecutive quarter.

Palantir co-founder and CEO Alex Karp is known for promoting patriotism in the tech space and helping governments and military agencies manage their data. He recently The New York Times Palantir is committed to “discovering what is hidden.”

To join the S&P 500, a company must report a profit in its most recent quarter and have a cumulative profit over the last four quarters.

“We’re interested in profitability, for obvious reasons, but we think we’ll be in a much stronger position once we have clarity on our eligibility to join S&P,” Karp told analysts on a May 2023 conference call.

Dell has posted profits nearly every quarter since 2019. The stock is poised to rise 90% through 2023 and was up 33% this year before the rebalancing announcement. Growth is expected to continue. NVIDIA A graphics processing unit capable of handling AI workloads. Dell told investors The company said on August 29 that demand for AI servers for the quarter ended August 2 was $3.2 billion, up 23% from the previous quarter.

Cybersecurity Vendors Crowdstrike It was added to the index during the last rebalancing in June.

S&P Global said the additions better reflect larger U.S. stocks. The median market capitalization of the companies in the index is about $33.5 billion. Palantir has a market capitalization of more than $67 billion, while Dell has a market capitalization of more than $72 billion.

Shares of Workday, another software maker, fell 2% after the close.In an email early Friday, Bank of America’s trading desk named Workday along with Palantir as a top pick for S&P inclusion.

—CNBC’s Ari Levy contributed to this report.