Shares of Dell and Palantir surged around 7% in extended trading on Friday following an announcement from S&P Global that both companies will be added to the prestigious S&P 500 index. Palantir, a software maker, will replace American Airlines, while Dell will take the place of Etsy in the benchmark index.
For Dell, this marks a return to the S&P 500. The computer and server manufacturer was part of the index from 1996 until 2013 when founder Michael Dell and private equity firm Silver Lake took the company private. Dell went public again in 2018. The company has seen impressive growth, with a 90% jump in stock value in 2023 driven by demand for AI servers equipped with Nvidia graphics processing units. Dell reported $3.2 billion in AI server demand for the quarter ending August 2, a 23% increase from the prior quarter.
Palantir, co-founded by CEO Alex Karp, has also experienced notable growth since going public in 2020. The company reported a profit of $135.6 million in the second quarter of 2023, up from $27.9 million the previous year, marking its fourth consecutive quarter of accelerating revenue growth. Known for its work with government and military agencies, Palantir has positioned itself as a leader in data management and analytics, which Karp has described as “the finding of hidden things.”
Companies joining the S&P 500 typically see a boost in their stock prices as fund managers who track the index adjust their portfolios to reflect the new additions. Both Dell and Palantir’s inclusion strengthens the index’s focus on high-market-cap U.S. stocks, with Dell valued at over $72 billion and Palantir at more than $67 billion.
As part of the rebalancing, software maker Workday saw its shares dip 2%, despite being a top candidate for S&P inclusion alongside Palantir, according to analysts at Bank of America.
These changes come as S&P Global aims to better represent the largest and most dynamic U.S. companies, particularly in sectors like AI and data management, which are driving the future of technology.
