This AI stock is the newest member of the S&P 500

By Claudia Assis

Ciena, maker of optical connectivity products, joins at the end of the week

Ciena makes some of the backbone of networking, which will need to be even more AI-ready.

Ciena, a maker of networking and telecom equipment all the more in demand with the growth of artificial intelligence, will join the S&P 500 on Friday, S&P Dow Jones Indices said late Wednesday.

Ciena (CIEN) moves up from the S&P Midcap 400 index MID and replaces Dayforce, a software and services company, which was acquired by software-focused private equity firm Thoma Bravo in a $12.3 billion deal that closed Wednesday.

A place in the S&P 500 SPX is a coveted spot for companies, as it exposes their shares to a much broader range of investors, including passive funds that track the benchmark and actively managed funds that may have restrictions on how small they can invest.

Underscoring such importance, according to a Wall Street Journal report Wednesday, advisers for SpaceX and other startups vying for initial public offerings have contacted index providers to discuss the possibility that the companies might join key indexes sooner than usual.

Ciena got the S&P nod ahead of other candidates such as chip maker Marvel Technology (MRVL) and optical supplier Coherent (COHR).

After falling 8.3% during the regular trading day, Ciena shares rebounded more than 3% after hours.

Analysts at Evercore ISI said in a note Tuesday that they see plenty of tailwinds for the networking industry to outgrow broader spending in information technology, including the need to upgrade networking infrastructure to be ready for AI.

-Claudia Assis

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(END) Dow Jones Newswires

02-04-26 2023ET