The biggest tech companies in the US seem to break their own records. The companies are getting too big for the inventory index that monitors the biggest tech corporations in the United States. This led to the benchmark overseer taking action to cut their influence.
In recent times, the index saw unstoppable growths of tech giants like Apple and Microsoft. This means that these companies went past the upper limit that Nasdaq 100 set on the stocks. Hence, Nasdaq recently announced that they will carry out a special semblance to redistribute the weight of the members of the index. This is the first time this practice will be carried out.
The index opened up last Friday about their decision to make adjustments on 24th July, and according to the index provider, that adjustment will “address overconcentration in the index by redistributing the weights. They also said that they would come up with more details by the end of this week.
According to Bloomberg,
“Fueled by optimism over artificial intelligence, the supercharged performance has sparked a heated debate on Wall Street about whether this top-heavy advance can last.”
Furthermore, Bloomberg data showed that on 3rd July, six companies, Apple, Microsoft, Alphabet, Amazon.com, and Nvidia, had a combined weight of 50.9%. Nasdaq came out with a methodology paper, according to which there is a need for rebalancing, which needs to come in place to reduce the influence of the group to 40%.
Nasdaq continued a sustained rally in 2023, where they accounted for all the broad market gains of the companies, and due to this, they have been able to take this action.