:max_bytes(150000):strip_icc()/GettyImages-2265587897-d41b820741aa40c789c076eabf9d9046.jpg "These Two Nvidia-Backed Companies Are Joining the S&P 500 Later This Month")
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Key Takeaways
- Shares of Lumentum and Coherent are rising to start the week following the announcement on Friday that the companies would be added to the S&P 500 later this month.
- Nvidia recently announced $2 billion investments in both companies.
- EchoStar and Vertiv will also be joining the benchmark index.
Four companies—including two part-owned by AI chip giant Nvidia—are set to join the S&P 500 later this month.
S&P Dow Jones Indices on Friday said Coherent (COHR), EchoStar (SATS), Lumentum (LITE) and Vertiv (VRT) would be added to the benchmark index of U.S. companies before the start of trading on March 23. They’ll replace Lamb Weston (LW), Match Group (MTCH), Molina Healthcare (MOH) and Paycom Software (PAYC).
Why This Matters to Investors
Inclusion in the S&P 500 is generally seen as a good thing for a company and its stock, in part because many investors’ portfolios include exchange-traded funds that track the index, and those funds must buy shares of the companies in the wake of their addition.
Nvidia (NVDA) earlier this month reported stakes in photonics and laser makers Coherent and Lumentum, giving those companies’ shares a boost. Those investments, valued at the time at $2 billion apiece, came on the back of strong performance for both stocks this year.
Shares of Coherent were recently up more than 3%, while Lumentum’s shares rose about 11%. Nvidia’s shares were up more than 1%. Read Investopedia’s full coverage of today’s trading here.
Wall Street analysts generally expect both Lumentum and Coherent to keep rising. The Street’s mean price target on the former is particularly bullish, representing about 20% upside to recent prices according to Visible Alpha’s survey.
The latest changes were part of a raft of updates S&P Dow Jones Indices announced last week. That included changes to the S&P 100, a subset consisting of the larger companies contained in the broader measure, including the addition of Applied Materials (AMAT), GE Vernova (GEV), Lam Research (LRCX) and Micron (MU), and the removal of American International Group (AIG), Metlife (MET), Paypal (PYPL) and Target (TGT).
