S&P 500 Rebalancing: 3 Key AI Stocks Earn Their Spot in the Index

Key Points

• Four are stocks in, and four stocks are out; the S&P 500 just got reshuffled.
• Three top AI stocks, LITE, COHR, and VRT, are among the names entering.
• Meanwhile, a name that has been working closely with Elon Musk's SpaceX is also entering the index.

The S&P 500 has officially completed its latest quarterly rebalancing, with four new stocks entering the index and four exiting. Given the current market environment, it is unsurprising that three of the index's additions are companies closely tied to the artificial intelligence (AI) data center buildout.

Let’s walk through the stocks that received the cold shoulder and the exciting names that are entering the index. These changes became effective before the market open on March 23.

MTCH, MOH, LW, PAYC Get the Boot, SATS Gets In

Below are the four stocks that the S&P 500 has removed:

• Dating app operator Match Group NASDAQ: MTCH
• Low-income managed healthcare provider Molina Healthcare NYSE: MOH
• Frozen potato product company Lamb Weston NYSE: LW
• Payroll and human resources software company Paycom Software NYSE: PAYC

All of these names have dropped 60% or more from their all-time highs, putting their market capitalizations near or below $7 billion. S&P Dow Jones Indices notes that to be eligible for addition to the S&P 500, a company must have a market capitalization of $22.7 billion or more. Although this is not a requirement for continued membership, companies that have fallen below this threshold are typically eligible for removal.

Even after these four stocks lost their place in the index, many stocks that remain in it will have market caps below $22.7 billion. However, to prevent large, abrupt turnovers in the S&P 500, S&P Dow Jones Indices tends to make only around four removals and additions per quarter.

Outside of the three AI stocks, the S&P 500 has added EchoStar NASDAQ: SATS. The company, which owns Dish TV, has seen its stock price rise by around 300% in the past 52 weeks. This comes as the firm has been selling valuable spectrum licenses, primarily to Elon Musk’s SpaceX.

Owning spectrum licenses gives a company the right to send signals over certain radio frequencies, which is essential for telecommunications. Through its deal with SpaceX, Echostar now owns approximately 2.8% of the company. Thus, investors see it as a way to gain indirect exposure to Musk’s massive private space firm.

LITE & COHR: Optics Giants Enter the S&P After Massive Gains

AI stocks Lumentum NASDAQ: LITE and Coherent NYSE: COHR are taking their place in the index, with these names putting up astounding performances recently. Lumentum is up nearly 1000% in the past 52 weeks, while Coherent is up more than 250%. Both of these companies have been the beneficiaries of a key shift taking place in data center networking.

Networking equipment connects different data center components together, allowing them to communicate. Traditionally, and still today, networking equipment uses copper wire, sending signals electrically. However, as the amount of information data centers process increases, there is a growing shift toward optical networking.

Optical equipment sends signals using light, allowing for faster speeds and less heat generation. However, it is also more expensive than copper and is currently seen as less reliable. For these reasons, data center operators want to keep using copper as long as they can, but a continued shift toward optical is somewhat inevitable. This long-term dynamic puts Lumentum and Coherent in enviable positions, as they are among the leaders in optical networking.

Notably, NVIDIA NASDAQ: NVDA recently invested $2 billion in both Lumentum and Coherent to support research and development and help fund manufacturing capacity investments. NVIDIA is also securing access to future capacity through these agreements. Overall, these agreements clearly show the vital role NVIDIA believes optical networking plays in the future of data center infrastructure.

VRT: The “Coolest” Addition to the S&P 500

After putting up an impressive gain of over 180% during the past 52 weeks, Vertiv NYSE: VRT will also enter the S&P 500. This comes as the firm is a leader in cooling solutions.

As data centers become more powerful and use more energy, they also produce more heat. This creates an increasing need for cooling, particularly liquid cooling solutions, like those Vertiv provides. Liquid cooling systems are more effective at transferring heat than air-cooled solutions.

In 2025, Vertiv’s total revenues grew by nearly 28%, the company’s fastest annual growth rate since going public. The future sales outlook continues to be strong, with the company recording a 2.9x book-to-bill ratio last quarter. The firm ended the year with a backlog of $15 billion, about 1.5 times its 2025 revenue. 

The company also saw free cash flow growth of 64%, with the figure moving up to around $1.9 billion during the year.

SATS, LITE, COHR, VRT: The S&P 500’s New Kids on the Block

SATS, LITE, COHR, and VRT have achieved a big milestone in becoming included in the S&P 500. This does not guarantee the future performance of these names will be anything like their past performance. However, they have now clearly established themselves as among the most important companies in the world.

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