Alex Karp, CEO of Palantir Technologies, walks to the morning session at the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, on July 10, 2024.
David Paul Morris | Bloomberg | Getty Images
Palantir shares popped 14% on Monday and are trading at their highest since early 2021 after the announcement late Friday that the stock is being added to the S&P 500.
Palantir is joining the index along with Dell. Palantir and Dell are replacing American Airlines and Etsy, respectively, S&P Global said in a press release.
Shares of companies added to the benchmark often rally after the announcement because fund managers who track the index regularly update their portfolios to mirror the additions. Dell shares rose almost 4% on Monday.
To join the S&P 500, a company must have reported a profit in its latest quarter and have cumulative profit over the four most-recent quarters. In the second quarter, Palantir’s net income totaled $135.6 million, up from $27.9 million in the same period a year earlier. The company turned profitable in the final quarter of 2022.
Tech companies have been capturing a bigger share of the S&P 500, reflecting their growing significance to the broader economy. Cybersecurity vendor CrowdStrike was added to the index during the previous rebalancing in June. Super Micro Computer, which competes with Dell in selling servers for artificial intelligence workloads, joined three months before that.
The median market cap of companies in the S&P 500 is about $33.5 billion. Palantir has a market cap of more than $76 billion. The company went public on the New York Stock Exchange in 2020. Its stock hit a closing high of $39 in January 2021.
The shares closed at $34.60 on Monday, about 11% shy of its high.
— CNBC’s Ari Levy contributed to this report.