Dell and Palantir experienced significant stock jumps, both rising about 7% in extended trading on Friday following news that they will be joining the S&P 500 index. S&P Global announced that software giant Palantir will replace American Airlines, while Dell will take Etsy’s spot on the index. This inclusion often leads to stock rallies as fund managers adjust their portfolios to reflect the changes in the benchmark.
Dell’s Return to the S&P 500
For Dell, this marks a return to the prestigious index after a long hiatus. The company was previously a part of the S&P 500 from 1996 to 2013, but was taken private by founder Michael Dell and private equity firm Silver Lake in 2013. In 2018, Dell returned to the public markets and has consistently posted profits since 2019. The company’s growth has been powered by strong demand for AI-capable servers, which saw a 23% quarterly increase, reaching $3.2 billion in sales.
Palantir’s Remarkable Journey
Palantir, which went public in 2020 after over 15 years as a venture-backed startup, has also been posting steady profits. In the second quarter of 2023, Palantir reported a net income of $135.6 million, a significant jump from $27.9 million a year prior. Palantir’s CEO, Alex Karp, is known for emphasizing the company’s commitment to supporting government and military data initiatives. Karp expressed optimism about the inclusion in the S&P 500, noting that profitability was key to achieving this milestone.
Market Shifts Reflect U.S. Giants
The recent additions of Dell and Palantir to the S&P 500 signal a broader trend of including high-growth, high-market-cap companies. Dell’s market cap stands at over $72 billion, while Palantir is valued at over $67 billion, well above the median of $33.5 billion for companies in the index. As companies like Dell continue to capitalize on AI demand and Palantir pushes forward with data analytics, their inclusion highlights the evolving nature of the U.S. stock market.