Palantir Stock Is Joining the Nasdaq-100 Index, and Super Micro Computer Is Being Booted: What Investors Should Know

Palantir Technologies (PLTR 3.92%) stock investors got some good news to start their weekends. On Friday at 8 p.m. ET, Nasdaq (NDAQ -0.93%) announced that the artificial intelligence (AI)-powered software company is being added to the Nasdaq-100 index.

This move by Nasdaq — which owns and operates its namesake stock exchange and others — is part of its annual reconstitution of the Nasdaq-100 index, which comprises 100 of the largest non-financial companies listed on the Nasdaq Stock Market.

In 2024, Palantir stock has soared 343% through Dec. 13 versus the S&P 500‘s 29% return. So, it’s easy to understand how a huge, roughly corresponding increase in Palantir’s market cap has landed it a place on the Nasdaq-100.

The timing of the news release was strategic, as 8 p.m. ET is when after-hours stock trading ends in the United States. I suspect Palantir stock would have gotten a boost had this news been released during either regular or after-hours trading.

What stocks are being added and removed from the Nasdaq-100?

Along with Palantir, the stocks being added to the Nasdaq-100, launched in 1985, are MicroStrategy and Axon Enterprise.

Palantir is a software-as-a-service (SaaS) company that provides AI-powered software over the cloud. Its platforms enable its customers to use their data to increase operational effectiveness and efficiency. Its customers include agencies within the U.S. government and those of our allies and commercial customers.

MicroStrategy operates as an enterprise software company, but most investors likely view it as a play on the price of Bitcoin since the company plows money into buying the cryptocurrency. As of Dec. 13, 2024, MicroStrategy stock is up 547%.

Axon sells body cameras and other products and services to law enforcement, the military, and consumers. Through Dec. 13, Axon stock is up 150% this year.

The three stocks being removed from the Nasdaq-100 are AI server specialist Super Micro Computer (SMCI -3.90%), genomics-focused biotech Illumina, and biotech Moderna, best known as the maker of one of the two mRNA-based COVID-19 vaccines.

Shares of Supermicro are up 28% through Dec. 13, 2024, but they’ve plunged 69% since hitting their all-time high in March. The stock’s big drop is partly due to the weakening of some of the company’s financial metrics. However, it mainly stems from the fallout following a well-known short-seller’s allegations of accounting manipulations and other items of concern to investors. (Short-sellers are those who bet on the price of a stock declining.)

Illumina stock has eked out a gain of 6% so far this year, while Moderna stock has plummeted 58%, largely due to a steep fall-off in sales of its COVID-19 vaccine.

When does Palantir stock join the Nasdaq-100 Index?

The reconstitution of the Nasdaq-100 index will become effective prior to the market open on Monday, Dec. 23.

How does being added to the Nasdaq-100 benefit Palantir and its shareholders?

A Nasdaq-100 index membership means mutual funds, exchange-traded funds (ETFs), and other financial products based on this index will have to buy shares of Palantir. This increased demand should exert at least some upward pressure on the stock price.

Membership in any well-known stock index also increases a company’s visibility. Greater awareness of Palantir will widen the pool of potential investors in its stock.

The good news keeps rolling in for Palantir stock investors

Palantir stock investors have had an abundance of good news recently. Notably, the company released a fantastic third-quarter report last month, which sent shares soaring more than 24% the next day.

In the third quarter, Palantir’s year-over-year revenue and adjusted earnings per share (EPS) surged 30% and 43%, respectively. Both results beat Wall Street’s estimates. Moreover, management increased full-year 2024 guidance for revenue, adjusted operating profit, and adjusted free cash flow.