Nasdaq 100 Rebalances, Trimming Tesla, Meta, and Broadcom's Influence

Nasdaq 100 Rebalances, Trimming Tesla, Meta, and Broadcom's Influence

The Nasdaq 100 Index has undergone an annual rebalancing, resulting in a decrease in the weighting of three prominent technology companies: Tesla, Meta Platforms, and Broadcom. This adjustment follows a period of substantial growth for these companies, particularly in 2024, which propelled them to unprecedented levels of market dominance. A Closer Look at the Rebalancing: Weight Adjustments: Tesla, Meta, and Broadcom experienced a reduction in their influence within the index. Conversely, Apple, Nvidia, Microsoft, and Alphabet saw an increase in their respective weightings. Rationale: This rebalancing marks the second instance within a year, necessitated by the exceptional growth of the "Magnificent Seven" tech stocks. The Nasdaq 100's rules are designed to prevent excessive influence by a limited number of companies, ensuring a more balanced representation. Methodology: The Nasdaq 100 primarily bases its weighting on market capitalization. However, specific provisions are i…