Marvell Technology is set to join the benchmark S&P 500 index, S&P Dow Jones Indices announced on Friday, sending the chipmaker's shares up 6% in extended trading. The company will be added to the index later this month, following its recent achievement of a key profitability milestone amid a blistering AI-driven rally.
Details of the Index Addition
Marvell will replace swimming pool equipment distributor PoolCorp on the S&P 500 before the start of trading on June 22. The inclusion comes after Marvell reported a GAAP profit in its December quarter and over the sum of its most recent four quarters, a criterion it had previously failed to meet, making it ineligible for inclusion.
AI-Fueled Rally Boosts Shares
Marvell's shares have more than tripled so far this year, bolstered by a broader rally in chip stocks driven by hopes for runaway AI-related demand. This week alone, the shares gained roughly 29%, partly due to Nvidia CEO Jensen Huang calling the chipmaker the 'next trillion-dollar company.'
Marvell and larger rival Broadcom design custom chips for cloud-computing companies' specific data center needs. This business has grown rapidly as Big Tech companies seek to reduce reliance on Nvidia's costly and supply-constrained AI processors.
Revenue Forecast and Market Impact
In its most recent quarterly earnings, Marvell forecast that its custom chip business would surpass US$10 billion in revenue in fiscal 2029. The inclusion reflects how the AI boom is reshaping major U.S. equity benchmarks, with chip and data-center infrastructure companies commanding increasingly large weights as investors bet on sustained demand from cloud providers and AI workloads.
Marvell's addition to the benchmark will 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.
