Palantir and Dell Added to the S&P 500; Both Stocks Surge
Palantir Technologies CEO Alex Karp was a key speaker at the World Economic Forum in Davos, Switzerland on January 18, 2023. Following the recent announcement by S&P Global regarding their inclusion in the S&P 500 index, both Dell and Palantir experienced a significant surge of approximately 7% in after-hours trading on Friday.
The software company Palantir will be replacing American Airlines in the index, while Dell is set to replace Etsy. Generally, when companies are added to the S&P 500, their stock prices tend to rise as fund managers adjust their portfolios to reflect these changes.
This move marks Dell’s return to the benchmark index after being a part of it from 1996 to 2013 before going private. Subsequently, Dell went public again in 2018.
Palantir, on the other hand, made its debut on the New York Stock Exchange in 2020 after operating as a venture-backed startup for more than 15 years. In the latest financial quarter, Palantir reported a net income increase to $135.6 million, showcasing significant growth in annual revenue for the fourth consecutive quarter.
Palantir co-founder and CEO Alex Karp is known for his emphasis on patriotism in the tech sector, particularly in aiding government and military agencies with data management. Describing Palantir’s work, Karp has mentioned their involvement in “the finding of hidden things.”
In order to be included in the S&P 500, a company must demonstrate profitability in the most recent quarter and sustain cumulative profits over the past four quarters.
Dell’s profitability track record has been robust since 2019, with the company experiencing a 90% stock surge in 2023. The company has attributed its growth to the increasing demand for servers equipped with Nvidia graphics processing units capable of handling AI tasks, with AI server revenue in the quarter ending August 2 reaching $3.2 billion.
Palantir and Dell’s market capitalizations align with the S&P 500’s aim to represent U.S. stocks with substantial market values. Palantir boasts a market cap exceeding $67 billion, while Dell’s valuation surpasses $72 billion.
Workday faced a slight setback with a 2% decline in after-hours trading post the S&P 500 announcement, despite being an early contender alongside Palantir according to the Bank of America trading desk.
The recent additions to the S&P 500 are expected to enhance the representation of U.S. companies with significant market capitalizations, as stated by S&P Global.
Contributions to this report by Ari Levy from good.
