A significant change may be coming for some of the tech sector’s leading companies. Specifically, the Nasdaq 100 is set to adjust the weighting of its components, which total 100 companies. The weighting changes will be announced on Friday, July 14 2023 and will take effect on Monday, July 24 before markets open.
This index is home to a group of stocks known as the “Magnificent Seven,” which includes leading tech companies like Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Nvidia (NASDAQ:NVDA). These seven out of 100 companies account for more than half of the weight of the Nasdaq 100.
NVDA stock isn’t reacting particularly well to the news today, nor are many of its fellow leading tech stocks. Are these tech stocks in for a difficult road ahead? Let’s dive into what the news means for Nvidia and its peers.
What’s Happening With NVDA Stock?
As noted, news of the looming Nasdaq 100 readjustment is pushing NVDA stock down today. Shares are currently down 1% for the day after some early morning volatility.
While NVDA stock isn’t off to a good start this week, its current trajectory does hint that a rebound is possible. That certainly wouldn’t be out of the question for a strong company like Nvidia, either. NVDA has proven to be a winner among both artificial intelligence (AI) stocks and blockchain stocks in particular — two areas that are booming right now.
That said, the question of what the Nasdaq 100 adjustment will mean for NVDA stock and peers still looms. Exchange-traded funds (EFTs) and mutual funds could be impacted if they are tracking the index. However, investors shouldn’t be too worried. As Investor’s Business Daily reports:
“[T]he impacts may be modest. For one, the big-cap Nasdaq index is going to adjust weightings, vs. a full addition or deletion. Also, far more money tracks the S&P 500, which is why S&P 500 component changes get a lot more attention than Nasdaq 100 moves.”
With that in mind, it’s unlikely that the “Magnificent Seven” will suffer too much once the index is adjusted. NVDA and others may be subject to some volatility later this month as the market reacts to the adjustment, but these prominent tech stocks have weathered storms before. This time shouldn’t be any different.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
