Amid AI boom, chipmaker Marvell to join S&P 500 index
What's the story
Marvell Technology, a leading semiconductor company, will be joining the S&P 500 index later this month. The move comes after the company cleared a key profitability hurdle amid an AI-fueled rally. Marvell will replace swimming pool equipment distributor PoolCorp on the benchmark index before trading starts on June 22. Following the announcement, Marvell's shares jumped nearly 6% in extended trading sessions.
Financial growth
GAAP profit clears hurdle for S&P 500 inclusion
Marvell's inclusion in the S&P 500 comes after it reported a GAAP profit over its most recent four quarters. This was a major hurdle that had previously kept it out of the prestigious index. The company's shares have more than tripled this year, thanks to a wider rally in chip stocks amid strong AI-related demand.
Market outlook
Marvell's market value and business growth
As of Friday's close, Marvell had a market value of $276.81 billion. The company designs custom chips for cloud-computing companies' specific data-center needs, a business that has grown rapidly as Big Tech looks to reduce reliance on NVIDIA's costly and supply-constrained AI processors. In its most recent quarterly earnings report, Marvell projected its custom chip business would exceed $10 billion in revenue by fiscal 2029.
Industry shift
AI boom reshapes US equity benchmarks
Marvell's inclusion in the S&P 500 highlights how the AI boom is reshaping major US equity benchmarks. Chip and data-center infrastructure companies are getting larger weights as investors bet on sustained demand from cloud providers and AI workloads. This move would trigger buying from index funds and ETFs that track the S&P 500, as passive managers are required to hold constituents in line with their benchmark weights.