Okta Joins the S&P 500 on Nov. 4, Replacing Kenvue, as Identity Security Rides the AI Agent Wave

Okta (OKTA) will join the S&P 500 before the market opens on Wednesday, Nov. 4, replacing Kenvue (KVUE), S&P Dow Jones Indices said on Oct. 30. The identity security company moves up from the S&P MidCap 400, a step that typically brings added attention and demand from index-tracking funds. Okta enters the index on the back of a beat-and-raise second quarter and a push to sell security for AI agents, software that can access data and act on a company's behalf.

The index changes

Kenvue is leaving because it is being acquired by Kimberly-Clark, and LiveRamp is leaving the SmallCap 600 because Publicis Groupe is acquiring it; both deals are expected to close soon, pending final conditions. Because Okta is moving from the MidCap 400, funds that track that index will sell the stock even as S&P 500 funds buy it, so the net index-driven demand is smaller than it would be for a company joining from outside the S&P family. Passive money tracking the S&P 500 is generally much larger than money tracking the MidCap 400, which is why promotions like this have often drawn net buying, but the size of the flows has not been published.

What Okta does

Okta provides identity and access management, which helps organizations control who can reach their applications, systems and data. Its platform serves more than 20,000 customers and secures access for employees and customers and, increasingly, machines and AI agents. Analysts have been broadly positive: published reports count 34 Buy ratings, 10 Holds and no Sells.

The second quarter, reported Aug. 26

Strength was led by large enterprises, with customers paying $1 million or more in annual contract value up 22%, and the quarter was Okta's strongest bookings quarter outside its seasonally strong fourth quarter. Newer products, led by Okta Identity Governance, made up about 30% of bookings. CFO Brett Tighe tied the quarter to accelerating cRPO and success with the largest customers.

The AI agent opportunity

CEO Todd McKinnon framed the quarter around AI agents, saying each one needs a trusted identity and clear controls over what it can access. Okta has introduced an Okta for AI Agents offering to discover agents, secure their connections and govern their actions. The company closed dozens of AI-related deals in Q2, including several worth $1 million or more, and management says AI security conversations are prompting customers to modernize their broader identity systems. AI-specific products remain a small share of revenue, so the near-term story is still the core identity business.

Guidance

By our calculation, the Q3 revenue midpoint of $815 million is about 1% above Q2, and the Q3 operating income midpoint implies a non-GAAP margin near 24%, below Q2's 28%. The company also flagged about one point of revenue growth headwind from shifting professional services work to partners.

What to watch

• Nov. 3 close and Nov. 4 open. Index funds typically trade at the close before an effective date, which can add volatility around the change.
• Next earnings. Whether cRPO growth holds at 14% or higher against guidance that implies a small sequential increase.
• AI agent traction. Disclosure of revenue or customer counts for Okta for AI Agents, which is not yet broken out.
• Margins. The step down in guided Q3 operating margin.
• Market backdrop. See our Research Desk analysis, the Week Ahead article and our coverage of the Anthropic S-1 amendment for the AI backdrop.

Sources: Okta's second quarter fiscal 2027 results announcement. The index changes were announced by S&P Dow Jones Indices on Oct. 30. Analyst ratings come from published reports and will change. Items labeled by our calculation are our own arithmetic. This article is informational only and is not investment advice.