The Nasdaq 100 index is set to adjust the weighting of its 100 components before the market open on Monday, July 24, to “address overconcentration in the index by redistributing the weights” in a Special Rebalance, the exchange stated late Wednesday.
The ‘magnificent seven’ stocks, including Microsoft (MSFT), Apple Inc (NASDAQ:AAPL) (AAPL), Nvidia (NVDA), Tesla (TSLA), Google parent Alphabet (GOOGL), Meta Platforms (META) and Amazon.com (AMZN), currently account for 55% of the index’s weighting.
Based on Nasdaq 100 methodology, the combined weight of the five companies with the largest market caps (Apple, Microsoft, Google, Amazon and Nvidia) will be capped at 38.5%, down from the previous combined weight of 46.7%.
As well, no component outside the top-five market cap companies can have a Nasdaq 100 exceeding the lesser of 4.4% or the weight of the stock with the fifth-largest market valuation, Investor’s Business Daily reported.
Starbucks (SBUX), Mondelez International (MDLZ), Booking Holdings (BKNG), Gilead Sciences (GILD), Intuitive Surgical (ISRG), Analog Devices (ADI) and Automatic Data Processing (ADP) are expected to see their Nasdaq 100 weighting increase following the special rebalance, according to Wells Fargo analysts.
The Nasdaq marketplace noted that weighting changes will be announced on Friday, July 14.
It will be the third Special Rebalance in the history of the Nasdaq 100 Index, with the first two happening in 1998 and 2011.
In a separate statement, the Nasdaq reported that it will add Trade Desk (TTD) to the Nasdaq 100 before the open on July 17, replacing Activision Blizzard (ATVI), which is expected to be acquired by Microsoft.
Contact Sean at sean@proactiveinvestors.com