Alex Karp, CEO of Palantir Technologies, speaks at the World Economic Forum in Davos, Switzerland, January 18, 2023.
Arndt Wiegmann Reuters
Dell and Palantir Both shares surged about 7% in full trade on Friday after S&P Global announced that the two technology companies would join the US S&P 500 stock index.
Palantir will take its place American Airlinesand Dell replacing Etsy, according to the statement.
This will not be Dell’s debut in the index. The computer and server maker was a constituent from 1996 to 2013, as founder Michael Dell and private equity firm Silver Lake took the company private. Dell went public again in 2018.
Super Micro Computer, which competes with Dell to sell servers for AI workloads, joined the S&P 500 earlier this year after a historic rally in its stock that has pushed the company’s market cap past $50 billion. The price has since been cut in half.
After operating as a venture-backed startup for more than 15 years, Palantir went public on the New York Stock Exchange in 2020, and in the fourth quarter of 2022, the company began posting profits. In the second quarter, Palantir’s net income totaled $135.6 million, up from $27.9 million in the same period a year earlier. Year-over-year revenue growth has accelerated for four consecutive quarters.
Palantir’s iconoclastic CEO, Alex Karp, has earned a reputation for helping companies and government agencies manage data. He recently told The New York Times that Palantir is involved in “discovering things that are hidden.”
Companies must be profitable in the most recent quarter to join the main index, and their earnings must be positive in the four most recent quarters.
“The interest in profits is for obvious reasons, but also, I think, we will be stronger because it is clear that we are eligible for participation in the S&P,” Karp told analysts at a conference in May 2023. . “And many people look at us again, again, and we will start to look closer at our strength.”
Dell has been profitable almost every quarter since 2019. Dell shares are up 90% in 2023, and were up 33% before the rebalancing announcement. Investors have become excited about the growth in server sales Nvidia a graphics processing unit that can handle artificial intelligence workloads. Dell told investors last week that it had seen $3.2 billion in AI server demand in the quarter ended August 2, up 23% from the previous quarter.
Cybersecurity vendors CrowdStrike added to the index during the previous rebalancing, in June.
Shares of companies added to the benchmark often rally after the announcement because fund managers who track the index regularly update their portfolios to reflect the additions.
The increase is a better reflection of U.S. stocks with high market capitalization, S&P Global said. The average market capitalization of the 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.
— CNBC’s Ari Levy contributed to this report.
