A close-up of the Workday logo on its headquarters in Pleasanton, California.
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Workday shares jumped 9% in extended trading on Friday after S&P Dow Jones Indices said the cloud software vendor will be added to the S&P 500.
The company, which has a market cap of about $70 billion, will replace Amentum Holdings in the index effective Dec. 23, according to a statement. The S&P 500 has added several other prominent technology stocks this year, including Dell and Palantir.
Workday, founded in 2005 and based in Pleasanton, California, went public on the New York Stock Exchange in 2012. Five years later, the company switched its listing to the Nasdaq.
In November, Workday reported $193 million in net income on $2.16 billion in quarterly revenue, which was up 16% from a year earlier. The company called for 14% revenue growth in the 2026 fiscal year. Prior to fiscal 2022, Workday, which sells human resources and finance software, was reporting net losses.
To be eligible for inclusion in the prominent U.S. index, companies need to show a profit in the most recent quarter, along with profit in the four most recent quarters.
In February, Carl Eschenbach, a former VMware operating chief and Sequoia Capital investor, became Workday’s sole CEO after being co-CEO since late 2022, alongside co-founder Aneel Bhusri. Workday will release an artificial intelligence agent for creating and submitting expense reports this year, and an agent for identifying inefficiencies in business processes will arrive in 2025, Eschenbach told analysts on a November conference call.
Stocks often rally when they’re added to a major index, as fund managers need to rebalance their portfolios to reflect the changes.
While more tech companies have been joining the S&P 500, not all of them have proven to be money makers for investors who buy index funds. Server maker Super Micro was added to the S&P 500 in March after a huge rally in the stock, driven by demand for Nvidia-based servers.
Super Micro shares peaked soon after that announcement but then tumbled in the ensuing months as the company failed to file its financials on time. The stock is about 60% off its peak, and the company said on Friday that it received an extension from Nasdaq to keep its listing.
WATCH: Workday co-CEO Carl Eschenbach on the impact of AI, job market landscape in 2024