S&P Dow Jones Indices said on June 5 that Marvell Technology will replace Pool Corp in the S&P 500 on June 22. The move shows how surging AI demand is reshaping the world’s most-followed equity index and redirecting billions in passive investment. In its latest quarterly earnings report, the semiconductor firm cleared the GAAP profitability criteria of the S&P 500 by posting positive profits over the past four quarters. Marvell will replace pool equipment distributor Pool Corp on the index. Its share price soared almost 6% in post-market trading after the announcement. Why Marvell’s S&P 500 inclusion matters for passive funds worldwide When a company enters the S&P 500, every index fund and ETF tracking the benchmark must buy its shares to match its weighting. Trillions of dollars in passive assets are tied to the index, meaning Marvell’s inclusion will force a wave of institutional buying that ripples through global capital flows. The addition also reflects a broader structural shift. The S&P 500’s technology sector now accounts for more than 39% of the index’s total market capitalization, its highest share on record and above the peak reached during the 2000 dot-com bubble, according to LSEG Datastream data. When companies like Alphabet, Amazon, and Meta (classified outside tech but spending heavily on AI infrastructure) are included, AI-linked firms represent more than half the index’s value. “If the small number of tech stocks that have been leading this market higher roll over, by definition, the indexes are going to roll over,” said Matthew Maley, chief market strategist at Miller Tabak. Data center demand turned Marvell into an S&P 500 giant Marvell’s path into the S&P 500 tracks the AI investment cycle almost exactly. The company designs custom chips for cloud providers looking to build alternatives to Nvidia’s supply-constrained processors. Data center operations now generate 75% of Marvell’s revenue, up from less than 10% before the company pivoted toward that market, according to CEO Matt Murphy’s remarks at Computex. The stock has more than tripled in 2026. A 29% gain in the week before the announcement alone was fueled partly by Nvidia CEO Jensen Huang calling Marvell “the next trillion-dollar company” at Computex on June 2. Nvidia invested $2 billion in Marvell in March 2026 to co-develop networking and silicon photonics technology. Marvell’s market capitalization stood at about $230 billion as of Friday’s close. The company forecast that its custom chip business would exceed $10 billion in annual revenue by fiscal 2029, per its most recent earnings report. Why profitability remains the key barrier to S&P 500 entry for AI companies The addition of Marvell illustrates the clash between AI-era valuations and the existing criteria for index inclusion. S&P Dow Jones recently held a public discussion on relaxing its eligibility requirements for large companies that go public. On Friday, the same day it added Marvell, the index provider announced it would not change those rules. This means companies such as SpaceX remain outside the index regardless of valuation. SpaceX is still private, and even after a listing it would face the profitability test: its IPO prospectus reported a net loss of $4.94 billion on revenue of $18.67 billion in 2025, as Cryptopolitan previously reported , a swing from a roughly $791 million profit in 2024 driven by the xAI merger. Marvell made a breakthrough where others could not by turning AI demand into GAAP profits. Chip stock selloff highlights risks beneath the AI market boom The announcement came amid the worst day for chip stocks in years. On Friday, the Philadelphia Stock Exchange (PHLX) semiconductor index tumbled 10.3%, its largest one-session loss since March 2020, after Broadcom’s quarterly report showed that custom AI chip sales fell short of expectations, Reuters reported. Marvell itself lost about 17% in Friday’s regular session until the after-hours S&P 500 news reversed the move. “The semiconductor sector was way overbought. That’s why we’re seeing the sell-off. I don’t think it’s the end of the bull market,” said Ohsung Kwon, chief equity strategist at Wells Fargo. Contract manufacturer Flex will also join the S&P 500 in the same rebalancing, replacing Campbell’s, according to S&P Dow Jones Indices. If you're reading this, you’re already ahead. Stay there with our newsletter .
