Four companies, including AI and data-center plays, are joining the S&P 500 index

By Emily Bary and Claudia Assis

Lumentum and Coherent, top candidates going in, get the nod

S&P Dow Jones Indices announced four new S&P 500 components late Friday.

Four companies related to the booming AI, satellite-communications and data-center-infrastructure businesses will be joining the S&P 500 index in the coming weeks.

S&P Dow Jones Indices said late Friday that Vertiv Holdings (VRT), Lumentum Holdings (LITE), Coherent (COHR) and EchoStar (SATS) will join the S&P 500 SPX, the premier U.S. equity benchmark, before the market open on March 23.

Lumentum and Coherent - optical-networking companies that have seen their shares explode higher in recent months - were seen as top candidates for inclusion.

That's because they had become vastly "oversized" for their current index home, the S&P MidCap 400 MID, said Melissa Roberts, an analyst at Stephens. Lumentum and Coherent ended Friday with market caps of about $40 billion and $44 billion, respectively. Lumentum's stock rose 2% in after-hours trading Friday, while Coherent's stock gained 0.5%.

Vertiv, based in Ohio, is a $93 billion maker of data-center infrastructure, and EchoStar is a $31 billion satellite TV and wireless company. Shares of Vertiv rallied more than 5% in the extended session Friday, and EchoStar shares were up 4%.

S&P Dow Jones Indices can change index components at various times, including quarterly and at its own discretion. A spot in the S&P 500 index is a coveted place for companies, as it brings their shares to a much broader range of investors, including passive funds and actively managed funds that may have limitations on where they can invest.

The companies slated to move up to the S&P 500 also had an advantage over other candidates for being in the S&P MidCap 400, Roberts said. That's because S&P Dow Jones Indices may see extra value in "migrations" that help balance the various indexes, which are weighted by market cap.

Roberts said the index committee may be more inclined to go with "migrators" versus new names, in part because there's an active mergers-and-acquisitions climate that should open up more opportunities for S&P 500 changes if member companies get purchased.

The four companies will join a slate of technology companies that earned spots in the benchmark index as AI supercharged their businesses. Sandisk (SNDK) made the cut last fall, while Super Micro Computer (SMCI) joined in March 2024.

-Emily Bary -Claudia Assis

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(END) Dow Jones Newswires

03-06-26 1801ET