Datadog Stock Surges 11% on S&P 500 Inclusion

Datadog, a leading provider of monitoring software, is set to join the S&P 500 index, replacing Juniper Networks. This change, announced by S&P Global, will be effective before the market opens on July 9. The news has driven Datadog's stock price up by nearly 11% in after-hours trading on Wednesday.

This development comes as Hewlett Packard Enterprise (HPE), another constituent of the S&P 500 index, recently completed the acquisition of Juniper Networks, a company specializing in data center network hardware. HPE disclosed in a filing that it had paid 134 billion dollars to Juniper Networks' shareholders. Over the weekend, both companies reached a settlement with the U.S. Department of Justice, which had previously filed a lawsuit opposing the transaction. As part of the settlement agreement, HPE agreed to divest its global Instant On campus and branch businesses.

While the technology sector already holds a significant portion of the S&P 500 index, the index continues to expand its exposure to this sector as it permeates more areas of society. In the latest weight adjustment in March, DoorDash became the newest addition to the index. Earlier in December 2023, cloud software company Workday was included, and in early 2024, companies such as Palantir, Dell, CrowdStrike, GoDaddy, and Super Micro Computer were added.

When a company is included in a major index, its stock price typically rises as fund managers adjust their portfolios to reflect the new index composition. Datadog, headquartered in New York, went public in 2019. The company reported a net profit of 24.6 million dollars and revenue of 761.6 million dollars for the first quarter of 2025. Its competitors include Cisco, which acquired Splunk last year, as well as Elastic and cloud infrastructure providers such as Amazon and Microsoft.

Despite its strong performance, Datadog's year-to-date performance has lagged behind the broader technology sector. As of Wednesday's close, the stock has declined 5.5% year-to-date, while the Nasdaq index has risen 5.6%. However, Datadog's current market capitalization of 46.6 billion dollars is significantly higher than the median level of the index.