NASDAQ 100: Understanding the Tech-Heavy Index

As an investor, I've always been drawn to the tech industry's power and potential. The NASDAQ 100 index focuses on the biggest non-financial companies on the NASDAQ exchange. It includes giants like Microsoft, Apple, Amazon, and Tesla. Exploring this index excites me.

In this article, we'll explore the NASDAQ 100. We'll look at what makes it up, how it performs, and the innovative companies that lead it. Whether you're new to investing or experienced, I hope this journey through the NASDAQ 100 will give you valuable insights. It might even inspire you to add this dynamic index to your portfolio.

What is the NASDAQ 100?

The NASDAQ 100 is a stock index that tracks the top 100 non-financial companies on the NASDAQ exchange. It's a key tech-heavy index. It gives investors a broad view of the tech sector and other leading industries.

Key Takeaways

• The NASDAQ 100 index tracks 100 of the largest non-financial companies on the NASDAQ exchange.
• It focuses on various sectors, with technology making up 62.25% of the index.
• Companies must have a minimum average daily trading value of $5 million to join the index.
• The index uses a modified market capitalization weighting. This limits the biggest companies' influence and balances the index.

Understanding the NASDAQ 100 Index

The NASDAQ 100 index covers a wide range of sectors. This includes technology, consumer discretionary, healthcare, and more. It helps spread out the risk of investing in just one industry.

Composition of the NASDAQ 100 Index

As of June 2024, the top 10 companies in the NASDAQ 100 are Apple, Microsoft, NVIDIA, and Amazon. Meta Platforms, Broadcom, Google, Tesla, and Costco Wholesale also make the list. These tech and consumer giants play a big role in the index's performance.

Top 10 NASDAQ 100 CompaniesPortfolio Weight

Apple Inc.	15.23%
Microsoft Corporation	8.17%
NVIDIA Corporation	7.61%
Amazon.com, Inc.	5.00%
Meta Platforms, Inc.	4.37%
Broadcom Inc.	2.86%
Alphabet Inc. (Class A and C)	4.54%
Tesla, Inc.	3.23%
Costco Wholesale Corporation	1.82%

Special Rebalancing of the NASDAQ 100

In July 2023, the NASDAQ 100 underwent a special rebalancing. This was due to the rise in tech stocks, especially Tesla. It had made the top 5 companies' weight exceed 48%.

The rebalance aimed to spread out the weights more evenly. It reduced the big players like Apple and Microsoft. Meanwhile, it increased the shares of companies like Alphabet and Netflix.

The rebalance was expected to affect the index's performance and volatility. But, it surprisingly didn't cause a spike in volatility. The NASDAQ 100 kept moving up smoothly.

CompanyPre-Rebalance WeightPost-Rebalance Weight

Apple Inc. (AAPL)	12.1%	11.5%
Microsoft Corporation (MSFT)	12.8%	9.8%
NVIDIA Corporation (NVDA)	5.7%	4.7%
Alphabet Inc. (GOOGL)	4.2%	4.5%
Broadcom Inc. (AVGO)	2.4%	3.0%

The nasdaq 100 rebalancing was a smart move by Nasdaq. It aimed to reduce index concentration and keep the index true to the tech sector. The changes to the top 5 companies were significant. Yet, the index performance and volatility stayed steady. This kept the NASDAQ 100 as a top choice for tech investments.

Investing in the nasdaq 100

The Nasdaq 100 index is a favorite for those looking into the tech-heavy market. There are many ways to get into this index, each with its own benefits and things to think about.

Exchange-Traded Funds (ETFs)

One easy way to invest in the Nasdaq 100 is through ETFs. ETFs like the Invesco QQQ Trust Series I are simple and low-risk. They aim to match the Nasdaq 100's makeup, giving investors a broad view of the biggest non-financial companies on the Nasdaq.

Mutual Funds

Mutual funds that track the Nasdaq 100 are another choice for investors. These funds try to match the index's performance, offering a diversified way to invest in tech. Mutual funds make it easy for investors to get into the Nasdaq 100 and its companies without much effort.

Futures and Options

For those who like to trade, the Nasdaq 100 can be accessed through futures and options. Nasdaq futures, like the CME E-mini Nasdaq Composite Futures and CME E-mini Nasdaq 100 Futures, let traders bet on the index's future prices or protect their positions. These contracts offer a way to get more exposure to the Nasdaq 100.

Whether it's ETFs, mutual funds, or futures and options, the Nasdaq 100 has many ways to invest in the fast-changing tech sector. Each choice has its own features, risks, and costs. It's key for investors to think about their goals and how much risk they can handle before picking the right Nasdaq 100 investment strategy.

Leading Companies and Their Technological Innovations

The NASDAQ 100 index includes some of the most innovative food and beverage companies. They use advanced technologies to grow and stay competitive. Let's explore how PepsiCo, Inc., The Kraft Heinz Company, and Mondelez International, Inc. are using technology to improve their operations and products.

PepsiCo, Inc.

PepsiCo is a giant in the food and beverage industry in North America. It leads in technology adoption. The company uses AI-driven data analytics to understand what consumers want. This helps in making better products and marketing strategies.

PepsiCo also invests in startups through PepsiCo Labs. This keeps it updated with the latest technological trends and 3D printing. These advancements help in saving costs and speeding up new product launches.

The Kraft Heinz Company

The Kraft Heinz Company is the third-largest food and beverage company in North America. It's transforming digitally to meet changing consumer habits. The company has teamed up with Google Cloud to use AI and machine learning for new product innovations.

It has also created a data platform called Kraft-O-Matic to guide future product development. Additionally, Kraft Heinz is looking into 3D printing for better and more sustainable packaging.

Mondelez International, Inc.

Mondelez International is a global leader in confectionery and snacks. It has been embracing new technologies. The company wants to get 20% of its sales from digital commerce by 2030.

Mondelez is using cloud computing, image recognition, and other advanced tools to boost its online presence. It's also using drones to check on cocoa plantations. Plus, Mondelez is exploring retail technology to increase sales and brand awareness in stores.

Nasdaq 100 Performance and Market Movers

The Nasdaq composite closed at 17,909.82 on the latest trading day. It was down 1.54% from the day before. So far this year, it's up 21.29%. The Nasdaq 100 is a key part of the Nasdaq composite. It includes the 100 largest non-financial companies.

The Nasdaq can be more volatile than other markets. But it has made big gains over time. It has even outperformed the Dow Jones Industrial Average. Now, let's look at some of the top gainers and losers in the Nasdaq 100 market movers:

Top GainersPercentage Increase

Illumina	7.78%
Pinduoduo	4.85%
GLOBALFOUNDRIES	3.42%
KLA-Tencor	3.14%
Marvell Technology	2.46%

Top LosersPercentage Decrease

Tesla	3.49%
MercadoLibre	4.62%
Warner Bros. Discovery	2.33%
The Kraft Heinz Company	2.27%
Lululemon Athletica	2.22%

These insights show how the Nasdaq 100 performance is always changing. They highlight the key players that are shaping the technology-heavy index.

Comparing the NASDAQ 100 to Other Major Indexes

Investors often look at the NASDAQ Composite and the Dow Jones Industrial Average (DJIA) to measure the U.S. stock market's performance. These indexes offer valuable insights but cater to different investor needs.

NASDAQ Composite vs. Dow Jones Industrial Average

The NASDAQ Composite focuses on the entire NASDAQ stock exchange, including U.S. and international companies. It emphasizes technology and growth stocks, making it more volatile but often outperforming the DJIA in economic growth.

The DJIA, on the other hand, tracks 30 of the largest U.S. companies. It's known for stability and is considered a conservative investment. This index includes leading companies across various sectors.

MetricNASDAQ CompositeDow Jones Industrial Average

Index Type	Market-capitalization-weighted	Price-weighted
Number of Constituents	Includes all stocks traded on the NASDAQ exchange	30 large, blue-chip U.S. companies
Sector Focus	Technology and growth stocks	Diversified across sectors
Volatility	Higher	Lower
Long-term Performance	Outperformed DJIA during periods of economic expansion	Provided more stability during market downturns

Investors should think about their goals, risk tolerance, and market outlook when choosing an index. Understanding the NASDAQ Composite and the Dow Jones Industrial Average helps investors make informed decisions. This ensures their investments match their desired outcomes.

Conclusion

The Nasdaq 100 is a key stock market index. It gives investors a chance to see the growth of top tech and consumer companies. Over time, it has seen ups and downs, showing the strength and change of these businesses.

Knowing how the Nasdaq 100 works helps investors understand the market better. It shows how tech companies drive growth. There are also easy ways to invest, like ETFs and mutual funds, making it simple to join in on the Nasdaq 100's success.

Looking back, the Nasdaq 100's journey is inspiring. It highlights the big leaps in tech and consumer industries. By keeping up with the Nasdaq 100, investors can grab the chances for growth in the tech world.

FAQ

What is the Nasdaq 100 Index?

The Nasdaq 100 Index is a group of the 100 biggest companies on the Nasdaq stock exchange. It covers various sectors like tech, healthcare, and manufacturing. But it doesn't include financial companies.

How is the Nasdaq 100 Index constructed?

The index uses a special method to pick its members. It makes sure big companies don't dominate too much. Companies must trade a lot and be listed only on Nasdaq to join.

What are the top sectors and companies in the Nasdaq 100 Index?

Tech makes up 62.25% of the index as of June 2025. The biggest companies in the index are Apple, Microsoft, and NVIDIA. Amazon, Meta Platforms, and Broadcom are also among the top.

Why did Nasdaq undertake a special rebalancing of the Nasdaq 100 Index?

Nasdaq rebalanced the index in July 2023. This was to spread out the influence of big companies. A rally in tech stocks, especially Tesla, was the reason.

How can investors gain exposure to the Nasdaq 100 Index?

Investors can use ETFs, mutual funds, futures, and options to track the index. They can also look into annuities linked to it.

What are some examples of Nasdaq 100 companies leveraging innovative technologies?

Companies like PepsiCo and Kraft Heinz use new tech to improve their services. They use AI, cloud computing, and 3D printing.

How does the Nasdaq 100 Index compare to other major market indexes?

The Nasdaq 100 focuses on growth stocks and is more volatile. The Dow Jones Industrial Average has blue-chip companies. Choose based on your investment goals and risk level.