Why SpaceX and OpenAI Inclusion Could Disrupt the S&P 500 Index

The arrival of trillion-dollar private giants like SpaceX, OpenAI, and Anthropic into the public markets is setting the stage for a massive structural confrontation within the world’s most influential stock index. As these AI and aerospace titans prepare for mega-cap listings, veteran valuation expert Aswath Damodaran warns that their eventual entry into the S&P 500 could fundamentally alter the index's risk and earnings profile.

The Battle Over Index Eligibility

Following the historic SpaceX IPO on June 12, 2026, a fierce debate has emerged regarding how quickly these massive companies should be fast-tracked into the S&P 500. Currently, the S&P Dow Jones Indices maintains a strict rule requiring a company to have been trading for at least one year before it becomes eligible for inclusion.

This rule effectively delays any potential inclusion of SpaceX, OpenAI, or Anthropic until 2027 at the earliest. Damodaran points out a growing tension: while the S&P 500 aims to be a large-cap index, it currently faces the challenge of excluding some of the largest market-cap entities in the global economy.

Risks to Index Fundamentals and Governance

Damodaran, a professor at NYU Stern, offers a sobering perspective on these potential additions. He argues that even a year after listing, companies like SpaceX and OpenAI may still be "money-losing businesses" with business models that are essentially works in progress. Furthermore, he notes they may present "corporate governance horror stories."

If the S&P 500 were to integrate these trillion-dollar entities, the mechanical impact on the index level would be neutralized through divisor adjustments. However, the fundamental DNA of the index would shift significantly. Investors could expect:

  • Increased Volatility: Higher overall risk profiles within the benchmark.
  • Earnings Dilution: A near-term hit to the aggregate earnings of the index.
  • Growth Potential: A possible long-term increase in the index's growth trajectory.

Debunking the "Index Inclusion Windfall" Myth

A critical takeaway for retail and institutional investors is the debunking of the "index effect." Many investors believe that being added to the S&P 500 guarantees a sustained rally. However, Damodaran cites empirical evidence showing that the short-term price bump from inclusion has largely vanished over the last two decades.

In fact, his research suggests that companies added to the index are now more likely to underperform than outperform in the 12 months following their entry. He highlights Tesla’s December 2020 inclusion as a prime example; following its entry, the stock massively underperformed the small REIT it replaced in the index.

Key Takeaways

  • Delayed Entry: Due to current S&P rules requiring one year of trading, SpaceX and OpenAI will likely not enter the S&P 500 until 2027 or later.
  • Structural Shift: Inclusion of these giants will likely increase the index's risk and impact its aggregate earnings, rather than just changing its market cap.
  • Vanishing Premium: The historical "price bump" associated with index inclusion has eroded, meaning investors should not rely on index entry as a guaranteed trading signal.