Marvell Technology and Flex to Join S&P 500 Index Later This Month

Marvell Technology and Flex Ltd. Join S&P 500 in Latest Quarterly Rebalance

S&P Dow Jones Indices announced on Friday that Marvell Technology Inc. and Flex Ltd. will be joining the S&P 500 index in the latest quarterly rebalance. The semiconductor company and the electronics manufacturing firm will replace Pool Corp. and The Campbell's Company before the start of trading on June 22.

Marvell's recent earnings have been a significant factor in its inclusion in the S&P 500. The company delivered a quarterly forecast that exceeded estimates and boosted its outlook for the year, citing demand for chips used in AI data centers. This surge in demand is driven by the need for computer systems in data centers that create and run artificial intelligence software and services. As a result, Marvell's shares rose 6% in after-hours trade.

Flex, on the other hand, has also demonstrated strong performance, issuing profit guidance for 2027 that exceeded consensus estimates. The company has announced that it will spin off its cloud and power infrastructure segment. Flex's shares were up 2% following the announcement.

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To be eligible for the S&P 500, companies must have a market capitalization of at least $22.7 billion and meet profitability, liquidity, and share-float requirements. The growth of passive investing has elevated the importance of inclusion in the US equity benchmark, as funds that track the index must buy newly added shares. Conversely, exclusion from the benchmark can weigh on a stock, as index funds sell shares to realign with the gauge's new composition.

The decision to include Marvell and Flex in the S&P 500 arrives as Wall Street grapples with a new reality: some companies are reaching unprecedented sizes before they ever enter public markets. In response to this trend, S&P Dow Jones Indices has stated that it will not shorten the 12-month seasoning period for giant newly public companies or waive existing profitability and public-float requirements based on a company's size.

This decision diverges from a broader industry shift embraced by rivals Nasdaq Inc. and FTSE Russell. As a result, companies like Elon Musk's SpaceX will not get immediate access to one of the largest and most reliable sources of demand in modern markets: the trillions of dollars benchmarked to the most widely followed stock index.

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In March, Vertiv Holdings Co., Lumentum Holdings Inc., Coherent Corp., and EchoStar Corp. were added to the index, replacing Match Group Inc., Molina Healthcare Inc., Lamb Weston Holdings Inc., and Paycom Software Inc.