The Nasdaq 100 index is set to adjust the weighting of its 100 components, with the “magnificent seven” stocks Apple, Microsoft, Nvidia, Tesla, Alphabet, Meta Platforms, and Amazon currently accounting for more than half the index’s weight.
Ed Carson for Investor’s Business Daily:
The Nasdaq 100 special rebalance will take place before the market open on Monday, July 24, to “address overconcentration in the index by redistributing the weights.”
The weighting changes will be announced on Friday, July 14.
The Nasdaq 100 includes the 100 largest non-financial Nasdaq components.
The Nasdaq 100 index is a modified market-capitalization index. Market valuation is the largest factor, but with methodology to limit overconcentration.
The seven-largest companies in the Nasdaq 100 account for 55% of the index. It seems likely that this combined weighting will be reduced. It’s also likely that there may be notable weighting shifts within these seven giants.
The current weights show that market capitalization is the dominant factor, but it’s not the only one.
Microsoft stock has the largest weight, at 12.9%, as of July 7. Apple stock has a 12.9% weight, despite having a $2.999 trillion market cap vs. Microsoft’s $2.51 trillion… Just for reference, for the entire Nasdaq composite, Apple stock has an 11.4% weighting while Microsoft is at 9.5%.
MacDailyNews Take: The S&P 500 index (which is far more important when it comes to component changes) unlike the Nasdaq 100, is a pure market-cap weighted index.
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This will result in a forced selloff by funds that track the index. The drop will have nothing to do with Apple’s intrinsic value, and might be an opportunity to scalp a few bucks. 🤷🏻♂️ Disclaimer: I often don’t know what I’m talking about.