Getting added to the S&P 500 is a big deal. To join, a company must have been profitable for the last four quarters as a whole and in the most recent quarter specifically, with a market cap of at least $22.7 billion. It also must meet float and volume criteria. When stocks are added to the S&P 500, they typically experience a short-term price surge known as the “index effect” as massive mutual funds and ETFs are forced to buy the shares to mirror the benchmark.
Historically, newly added S&P 500 stocks see stronger trading volumes and short-term price spikes as funds adjust their holdings. This year, several companies tied to the artificial intelligence boom are benefiting from that trend, including Marvell Technology, Flex Ltd., and Lumentum Holdings. After all, as demand for AI infrastructure, networking chips, and optical connectivity solutions accelerates, these stocks are attracting attention from both Wall Street and retail investors looking for the next major growth opportunity.
Marvell Gets an Immediate Boost
On the morning of June 8, the company announced it would join the S&P 500 on June 22. As a result, the stock soared about 9% in premarket.
Fueling even more momentum for the stock,
Jensen Huang, CEO of NVIDIA, recently described Marvell Technology (NASDAQ: MRVL) as a potential future trillion-dollar company. He highlighted the company’s networking and connectivity chips, which play a critical role in modern AI data centers where thousands of processors must rapidly exchange data to perform complex computing tasks.
Marvell currently has a market cap of $230.4 billion and just posted strong earnings.
“Marvell delivered record first-quarter fiscal 2027 revenue of $2.418 billion, up 28% year-over-year, and guided second-quarter revenue to $2.7 billion at the mid-point, representing 35% year-over-year growth. We expect revenue growth to continue accelerating each quarter throughout fiscal 2027, driven by continued strength in our data center business,” said Marvell CEO and Chairman Matt Murphy, as quoted in a company press release.
Flex Earns a Spot in the S&P 500
On June 22, Flex (NASDAQ: FLEX), the provider of electronic manufacturing services, will also join the index. With a market cap of $55.66 billion, the stock soared from an April low of about $70 to a recent high of $151.92 thanks to its strong position in the AI infrastructure market.
The company just posted EPS of 93 cents, which beat by five cents. Revenue of $7.48 billion, up 16.9% year over year, beat by $500 million. Plus. Barclays’ analysts just raised their price target on Flex to $203 from $174 on June 4, keeping a Buy rating.
Lumentum Offers a Preview of the S&P 500 Effect
Lumentum (NASDAQ: LITE) was added to the S&P 500 on March 23, running from about $710 to $800 a share shortly after.
Investors are rushing to buy optical networking companies, like LITE, because they’ve become an essential part of the artificial intelligence boom.
That’s because optical networking, which transmits data as pulses of light, can deliver far more bandwidth and higher speeds than traditional copper wiring. In addition, Nvidia announced a $2 billion multi-year agreement with LITE in March to help accelerate the adoption of advanced optical technologies.
Also, according to Goldman Sachs, optical networking is quickly becoming the next hot trend for the AI boom, as demand drives the need for faster data exchange and lower latency.
The Opportunity Ahead
S&P 500 inclusion remains one of the strongest catalysts a stock can receive, often triggering immediate institutional buying and increased investor interest.
For companies, such as those mentioned above, operating at the center of the AI revolution, the impact can be even greater. As artificial intelligence spending continues to expand, investors may want to keep a close eye on newly added S&P 500 companies that are positioned to capitalize on one of the market’s most powerful long-term growth trends.
