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Tuesday
Jun222010

Apple (AAPL) is 20% of the Nasdaq 100

With shares of Apple (AAPL) rallying even as the overall market remains weak, the stock's weighting in the NASDAQ 100 is beginning to make a mockery of the index.  Believe it or not, AAPL now has a 20% weighting in the index.  No, not even AAPL has rallied so much that its market cap actually accounts for 20% of the NASDAQ 100's market cap (although it does currently have the highest market cap in the index).  The reason for the large weighting dates back to the creation of the index when the market cap of Microsoft (MSFT) dwarfed the rest of the stocks listed on the NASDAQ.  Back then, in order to avoid making the NASDAQ 100 an index dominated by MSFT, they had to arbitrarily lower MSFT's weighting and raise the weighting of the rest of the stocks in the index.

Today, the NASDAQ 100 is increasingly becoming an index of Apple (AAPL).  At current levels, AAPL's weight in the index equals the combined weight of MSFT, GOOG, QCOM, ORCL, CSCO, and INTC!  Given that MSFT's weight was once adjusted so that it didn't dominate the entire index, some would say that it's time for the NASDAQ to adjust the weightings again so that AAPL doesn't dominate the index now.  However, according to NASDAQ's methodology for the index, AAPL's weighting in the index won't be up for review until its weight reaches 24% of the index or more. 

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Reader Comments (11)

at what price will AAPL be 24%
might be an interesting point to watch

June 22, 2010 | Unregistered Commentertony

Thanks for reminding it guys. I actually bought some puts on AAPL today.

It is painful to listen to the daily barrage of AAPL headlines in the financial media. I can't remember the last time AAPL did not gap open higher in the morning for what now, last 12 months?

http://market-vipasyana.blogspot.com/

June 22, 2010 | Unregistered CommenterVipasyana

Do you have any research confirming this thesis?

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June 23, 2010 | Unregistered CommenterBlogger Trader

Hey, don't let anything like crediting your sources ever get in the way of your reporting.

David

June 23, 2010 | Unregistered CommenterDavid Waggoner

David,

I'm not sure I understand your comment. Could you please elaborate?

Paul Hickey

June 23, 2010 | Unregistered CommenterPaul Hickey

Uncanny similarity to segment of this recent article. http://bit.ly/byRKQF Think you should reference when re-using material.

June 23, 2010 | Unregistered CommenterDavid Waggoner

Interesting. I didn't see that article, but we have been talking about AAPL's large weight in the Nasdaq 100 since April (see link below). Don't worry though, no need to reference it in your work.

http://bespokeinvest.squarespace.com/storage/big-tips-break-up-the-nasdaq-100.pdf

June 23, 2010 | Unregistered CommenterPaul Hickey

The wording of your recent post and what I wrote are very similar, to the point that it got the attention of a Minyanville reader who saw this post on an Abnormal Returns video and sent me the link. My apologies for jumping the gun, the general disregard for sourcing on the Internet bothers me.

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