In a significant development for the technology sector, Dell and Palantir saw their shares surge by approximately 7% during extended trading on Friday. This impressive growth came after S&P Global announced that both companies would be added to the prestigious S&P 500 U.S. stock index. Palantir will be taking the place of American Airlines, while Dell will replace Etsy, as confirmed by a statement from S&P Global.

For Dell, this marks a return to the index after being a constituent from 1996 to 2013. The computer and server manufacturer had been taken private in 2013 through a deal led by founder Michael Dell and private-equity firm Silver Lake. However, Dell went public again in 2018, and its shares have witnessed a remarkable 90% jump in 2023 even before the announcement of their inclusion in the S&P 500.

Palantir, on the other hand, went public on the New York Stock Exchange in 2020 after operating as a venture-backed startup for over a decade. The company has garnered attention in recent times for its profitable performance, reporting a net income of $135.6 million in the second quarter of 2022, compared to $27.9 million in the same period the previous year.

The addition of Dell and Palantir to the S&P 500 index highlights the growing importance and influence of the technology sector in the stock market. Both companies have demonstrated strong financial performance and have emerged as key players in their respective fields.

Investors reacted positively to the news, as fund managers who track the index are expected to update their portfolios to reflect these additions. Dell's success in the market has been driven by the increased demand for servers equipped with Nvidia graphics processing units that can handle artificial intelligence workloads. The company reported $3.2 billion in AI server demand for the quarter ended August 2, representing a growth of 23% from the previous quarter.

Similarly, Palantir's rise in the market has been fueled by its CEO, Alex Karp, who has gained a reputation for helping companies and government agencies effectively manage their data. With a market capitalization exceeding $67 billion, Palantir's inclusion in the S&P 500 further solidifies its position as a major player in the technology industry.

The addition of Dell and Palantir to the S&P 500 underscores the index's commitment to capturing the high market capitalization of prominent U.S. stocks. With the median market cap of companies in the index standing at approximately $33.5 billion, both Dell's valuation of over $72 billion and Palantir's market cap of over $67 billion make them significant additions.

Overall, this development showcases the continued growth and influence of technology companies in the stock market, as Dell and Palantir join the ranks of other tech giants added to the S&P 500 earlier this year. As investors eagerly await the reshuffling of portfolios, it remains to be seen how these additions will impact the broader market.