Four AI stocks join the S&P 500, prompting a buy, hold, or pass debate among investors

The S&P 500 just got an AI makeover. S&P Dow Jones Indices added four companies deeply tied to artificial intelligence infrastructure to the benchmark index effective March 23, 2026: Vertiv Holdings, Lumentum, Coherent, and EchoStar. They replaced Match Group, Molina Healthcare, Lamb Weston, and Paycom Software.

The numbers behind the new entrants

Lumentum, which makes optical components critical to data center networking, saw its shares surge more than 800% in the 12 months preceding the announcement. Coherent, operating in a similar optical networking niche, gained 262% over the same period. EchoStar climbed 274% year-over-year, buoyed by its spectrum assets becoming increasingly valuable in an AI-connected world.

A key catalyst behind the optical networking rally: Nvidia committed $2 billion in investments to Lumentum and Coherent, along with substantial purchase agreements linked to AI data center expansion.

Why the index swap matters

Getting added to the S&P 500 forces hundreds of billions of dollars in passive fund flows. Every index fund and ETF tracking the S&P 500 must buy shares of new entrants and sell the companies being removed. Vanguard’s S&P 500 ETF alone manages over $500 billion in assets.

Marvell Technology is set to join the S&P 500 effective June 22, 2026, continuing the pattern of AI-infrastructure firms displacing legacy index constituents.

The valuation question nobody can dodge

Lumentum’s 800% run means investors buying today are paying for years of anticipated revenue growth. Coherent’s 262% gain in a single year prices in significant optimism, though the Nvidia investment and purchase agreements provide a revenue floor that many AI-adjacent companies lack.

Vertiv provides power and cooling systems for data centers regardless of which AI chipmaker wins the architecture wars, giving it infrastructure agnosticism across the sector. EchoStar’s 274% gain is largely attributed to spectrum asset revaluation rather than direct AI revenue.

For passive investors, the debate is moot. If you own an S&P 500 index fund, you already own these stocks as of March 23.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.