Shares of artificial intelligence-powered data analytics company Palantir Technologies, Inc. (NYSE:PLTR) climbed sharply in premarket trading on Monday.

The gains can be traced back to a late-Friday announcement from S&P Dow Jones Indices that Palantir would be added to the S&P 500 Index, ahead of the start of trading on Sept. 23. Despite widespread anticipation, the S&P had snubbed Palantir in its two previous quarterly rebalancing.

The S&P 500 Index is considered the best single gauge of large-cap U.S. equities and includes 500 leading companies, covering approximately 80% of available market capitalization.

The eligibility criteria for S&P 500 Index inclusion are a market capitalization of $15.8 billion or more, an annual dollar value traded to float-adjusted market capitalization greater than 0.75, a listing in either NYSE or NASDAQ and a primary listing in the U.S. There is a trading-volume criterion as well.

Index inclusion is typically positive for stocks, as funds holding portfolios mirroring the index will buy them to maintain the respective weightings of the component stocks. The stock will also benefit from increased volume and liquidity due to purchases by index funds and ETFs.

Following the development, Wedbush analyst Daniel Ives said, "The profitability profile of this story has significantly been bolstered with this another validation moment for the Palantir story."

In premarket trading, Palantir shares 6.73% to $32.37, according to Benzinga Pro data. Dell Technologies Inc. (NYSE:DELL) and Erie Indemnity Company (NASDAQ:ERIE), which also made it to the index, rose 6.02% and 2.89%, respectively, in the premarket.

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