Dell and Palantir to Join S&P 500; Both Stocks Rise

Dell And Palantir Both rose about 7% in extended trading on Friday after S&P Global announced the companies would join the S&P 500 index.

Software maker Palantir will replace American AirlinesAnd Dell is replacing Etsyaccording to one declare. Shares of companies added to a benchmark index often rise in price following the announcement because fund managers tracking the index regularly update their portfolios to reflect the additions.

For Dell, the announcement marks a return to the benchmark. 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 returned to public ownership in 2018.

Microcomputerwhich competes with Dell in selling servers for artificial intelligence workloads, joined the S&P 500 earlier this year after a historic stock rally that pushed its market capitalization above $50 billion. The company’s value has since halved.

After more than 15 years as a venture-backed startup, Palantir went public on the New York Stock Exchange in 2020 and began reporting profits in the fourth quarter of 2022. In second quarterPalantir’s net income totaled $135.6 million, up from $27.9 million in the same period a year ago. Year-over-year revenue growth has accelerated for four consecutive quarters.

Palantir co-founder and CEO Alex Karp has made a name for himself promoting patriotism in technology, helping governments and military agencies manage their data. He recently said New York Times that Palantir is engaged in “searching for hidden things.”

To join the S&P 500, a company must report profits in the most recent quarter and have cumulative profits for the most recent four quarters.

“I care about profitability for obvious reasons, but I also think we’ll be in a much stronger position when we qualify for the S&P,” Karp told analysts on a conference call in May 2023.

Dell has been profitable in nearly every quarter since 2019. The stock was up 90% in 2023 and up 33% this year before the rebalancing announcement. Growth was driven by server sales Nvidia graphics processor that can handle AI workloads. Dell told investors The company said on August 29 that demand for AI servers in the quarter ended August 2 was $3.2 billion, up 23% from the previous quarter.

Cybersecurity Provider Mob attack has been added to the index in rebalance beforein June.

S&P Global said the additions better reflect large-cap U.S. stocks. The average market cap of companies in the index is about $33.5 billion. Palantir has a market cap of more than $67 billion, while Dell is valued at more than $72 billion.

Shares of another software maker, Workday, fell 2% after hours. In an email sent Friday morning, Bank of America’s trading desk named Workday among the top candidates for inclusion in the S&P, along with Palantir.

— CNBC’s Ari Levy contributed to this report.