Jim Cramer, the host of Mad Money, on Monday, discussed the latest changes coming to the S&P 500.

On Friday night, we got some big stock market news… S&P Dow Jones Indices, that’s the keeper of the S&P 500, announced a series of changes for its key benchmark index… With these changes, the S&P 500 will become even more levered to tech than it already is. Right now, the information technology sector alone accounts for 32.4% of the index, but there’s a ton of tech that’s classified under communications or consumer discretionary… It’s losing a healthcare stock and a consumer staple to make room for a couple more tech stocks.

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Cramer explained that he brings up these adjustments because the S&P 500 behaves more like an actively curated portfolio than many investors realize. He said that the index performs well over long periods in part because of that ongoing selection process. He mentioned that in his book, How to Make Money in Any Market, he advises investors to divide money between index funds and individual stocks.

I’m comfortable doing that largely because the best indices are constantly being adjusted, and this latest batch of changes really reinforces the importance of the AI data center buildout. Especially since the war with Iran got going, it often feels like the data center buildout is the only theme that’s really working in this market. When you look at the new entrants into the S&P 500, three out of four are data center plays, and one of the stocks that got the boot is an AI exile. So here’s the bottom line: In two weeks time, the S&P 500 will expel four underperformers and welcome their outperforming replacements, three companies that supply the data center and a satellite play that’s been selling a spectrum at a huge premium to what people thought it could get. I’m just glad there’s a theme that we can hold on to, even in this time of what I now have to say is extreme turmoil.

Our Methodology

For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on March 9. We listed the stocks in the order that Cramer mentioned them.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).

Jim Cramer Discussed 8 Stocks Amid the S&P 500 Reshuffle: Vertiv, Paycom, and More

8. Paycom Software, Inc. (NYSE:PAYC)

Paycom Software, Inc. (NYSE:PAYC) is one of the stocks Jim Cramer discussed amid the reshuffling of the S&P 500. Cramer discussed the threat from AI for the company, as he commented:

Finally, Paycom Software does online payroll and human resource software at a time when there’s just so many of these companies doing the same thing. In addition to the big payroll processors like ADP and Paychex, there are smaller players like Paycom. The whole group is being weighed down by worries about AI disruption. On the one hand, Paycom’s HR software becomes less enticing when Claude can whip up something similar.

On the other hand, if you believe in AI, then you believe it will destroy jobs. That’s how it saves money, which is, of course, bad news for the payroll processors. The big dogs, ADP and Paychex, they’ve been gutted, and Paycom is down 35% over the past 12 months. It’s also off 75% from its highs in late 2021, just at $7.5 billion market cap now at these levels. Wow.

Paycom Software, Inc. (NYSE:PAYC) provides a cloud-based software suite that helps small to mid-sized businesses manage the entire employment life cycle. The company’s platform offers tools for talent acquisition, time management, and data analytics. We recently mentioned the company while discussing oversold value stocks. You can read about it here.

7. Lamb Weston Holdings, Inc. (NYSE:LW)

Lamb Weston Holdings, Inc. (NYSE:LW) is one of the stocks Jim Cramer discussed amid the reshuffling of the S&P 500. Cramer highlighted the major decline in the stock over the past couple of years, as he said:

Third, Lamb Weston sells frozen potatoes. They dominate that entire business. The company was spun off by Conagra in 2016, and for a big chunk of the following decade, Lamb Weston was a consistent winner. But in the last few years, the stock’s been eviscerated. Now, look, maybe it’s a victim of the GLP-1 weight loss drugs, or maybe it just reflects the broader struggles of the restaurant industry. Either way, the stock’s down 55% over the past two years to the point where Lamb Weston’s become a $6.4 billion company. It’s now the subject, by the way, of an activist push from Starboard Value, a very smart firm that wants Lamb Weston to aggressively cut costs.

Lamb Weston Holdings, Inc. (NYSE:LW) produces and markets frozen potato products, appetizers, and commercial ingredients and distributes them through its network of sales personnel and independent brokers to restaurant chains, grocery stores, and foodservice institutions.