Key Points
The S&P 500 index goes through rebalances each quarter.
Marvell stock has gained 230% so far in 2026.
Last week, S&P Dow Jones Indices announced that Marvell will be added to the S&P 500 index later this month.
- 10 stocks we like better than Marvell Technology ›
For public companies, few milestones carry the allure of joining the S&P 500 (SNPINDEX: ^GSPC). After the market closed on June 5, investors learned that artificial intelligence (AI) semiconductor stock Marvell Technology (NASDAQ: MRVL) was chosen for inclusion in the S&P 500 index. The company will officially begin trading as a member of the S&P 500 on June 22.
Let's take a look at how companies gain entrance into the S&P 500 and assess what made Marvell such a compelling candidate.
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What makes a company eligible for the S&P 500?
S&P 500 inclusion rests on a number of criteria. First, a company must be domiciled in the United States and trade on an eligible exchange. Its shares must also demonstrate strong liquidity, as measured by average daily trading volume and percentage of shares available to trade. The company must also meet a market capitalization threshold.
Most critically, however, the company must pass a financial test. Specifically, the company has to generate positive earnings in the most recent quarter, and have a positive sum of earnings over the trailing four quarters.
Data by YCharts.
Marvell cleared each hurdle as of late 2025 after meeting the profitability requirement. Currently, the company's market capitalization of $248 billion is well above the index's threshold of $22.7 billion. In fact, prior to its inclusion, Marvell was the largest eligible candidate that had not yet earned a spot in the S&P 500 index.
What does S&P 500 rebalancing mean?
S&P 500 rebalancing is a methodical process the index uses to keep the benchmark representative of the largest U.S. companies. The index undergoes formal quarterly reviews to add or remove companies.
Rebalancing helps maintain market-cap weighting and sector representation so the index can mirror changes across the broader economy. In addition, rebalancing the index triggers automatic buying among exchange-traded funds (ETFs) tracking the S&P 500. For this reason, a new addition to the index can generate significant, albeit fleeting, demand on the date it earns inclusion.
Is Marvell stock a buy before the next S&P 500 rebalance?
So far this year, Marvell stock has skyrocketed 210% -- making it the third-highest performer in the Nasdaq-100. Most recently, shares jumped sharply after Nvidia CEO Jensen Huang called Marvell the next trillion-dollar AI chip stock.
Clearly, Marvell has turned into something of a momentum stock. Smart investors understand that event-driven buying invites front-running by institutional investors and algorithmic traders. In my eyes, the more prudent approach to investing in Marvell is to use dollar-cost averaging, instead of trying to time the exact rebalance window.
If you are bought into the narrative that AI hyperscalers will continue pouring capital into application-specific integrated circuits (ASICs) and high-speed networking gear -- the very products in Marvell's data center portfolio -- then building a position gradually through periodic purchases removes the guesswork around events like earnings or index rebalances.
I think Marvell's inclusion in the S&P 500 simply formalizes a reality that growth investors already recognize. Chasing this single catalyst risks turning the company's secular AI-driven opportunity into a speculative gamble.
The index is going to continue rebalancing each quarter. Meanwhile, the AI revolution will continue unfolding for several more years. The real edge belongs to patient investors who ignore countdown clocks around major events and instead remain focused on steadily committing capital to Marvell's underlying growth story.
Should you buy stock in Marvell Technology right now?
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Adam Spatacco has positions in Nvidia. The Motley Fool has positions in and recommends Marvell Technology and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
