Nasdaq 100 rebalance to shake up weights of tech giants

Nasdaq today announced that the Nasdaq-100 Index will undergo a special rebalance effective before the market opens on Monday, July 24, 2023. 

The Special Rebalance aims to address overconcentration by redistributing the weights of individual companies within the index. It will not result in the removal or addition of any securities.

The Nasdaq includes 100 of the largest Nasdaq-listed domestic and international non-financial companies. 

Microsoft, Apple, Nvidia, Tesla, Google parent Alphabet, Meta Platforms and Amazon account for over half the index’s weight.

Microsoft stock has the largest weight, at 12.9%, as of July 7. Apple stock has a 12.5% weight, despite having a $2.999 trillion market cap vs. Microsoft’s $2.51 trillion.

Google stock has a 7.4% weighting combined with the GOOGL and GOOG share classes.

Nvidia stock has vaulted to a 7% Nasdaq 100 weighting thanks to its $1.05 trillion market cap. That’s a slightly larger weight than Amazon stock (6.9%), even though the latter has a significantly higher valuation at $1.33 trillion.

Tesla stock and Meta Platforms round out the top-seven members, weighing 4.5% and 4.3%, respectively.

The combined weighting of the “magnificent seven” will be reduced by the special rebalance. Analysts are unsure about the impact on the weightings of the individual companies. 

Based on Nasdaq 100 methodology, the combined weight of the five companies with the largest market caps will be 38.5%. 

The five largest companies, Apple, Microsoft, Google, Amazon and Nvidia, had a combined weight of 46.7%.

The official reweightings should be released on Friday. 

The index is reconstituted annually in December, with additional quarterly rebalancing opportunities. A Special Rebalance occurs outside of this usual cycle.