Nasdaq 100 Overhauls Lineup, Boosts Tech, Health Bets

The Nasdaq 100 Index is set to undergo a major reshuffle on December 22, 2025, adding six new companies and removing six others as part of its annual reconstitution according to Bloomberg. Among the companies set to join are Seagate Technology Holdings Plc and Alnylam Pharmaceuticals Inc., which will bolster the index with their strong market performances and growing industry relevance. This year's changes reflect shifting market dynamics and evolving investor preferences in the technology and healthcare sectors according to Bloomberg.

The newly added firms include Ferrovial SE, Insmed Incorporated, Monolithic Power Systems Inc., and Western Digital Corp., which are all poised to benefit from inclusion in the index. These additions are likely to attract significant passive investor flows, as large ETFs like the Invesco QQQ Trust are required to adjust their portfolios accordingly according to Bloomberg. Meanwhile, companies like Biogen Inc. and The Trade Desk Inc. will be removed, marking a shift away from underperforming names in the index according to Bloomberg.

The index reshuffle is also drawing attention due to potential risks for Strategy Inc. (MicroStrategy), which has seen its share price drop amid concerns over its business model. Some analysts believe the company could be excluded from the index if it is deemed more of a cryptocurrency holding company than a traditional technology firm according to Channel News Asia. If removed, Strategy could face outflows from passive funds, though others argue its large market cap should protect its position according to Channel News Asia.

Market Implications and Investor Reactions

The addition of high-performing stocks like Seagate and Alnylam is expected to have a positive effect on the index's overall performance. Both companies have posted strong gains in 2025, with Seagate and Western Digital seeing over 200% increases in their stock prices. This aligns with the Nasdaq 100's broader upward trend, which has risen about 20% this year, driven by strong performances in the technology sector according to Bloomberg. Alnylam, in particular, has gained 75% this year due to the success of its drug vutrisiran, which has shown strong market adoption according to Investing.com.

The removal of certain stocks, including The Trade Desk and Lululemon, signals a realignment of the index toward more resilient and growth-oriented companies. The Trade Desk and Lululemon are among the worst-performing stocks in the index this year, with year-to-date drops of around 70% and 45%, respectively according to Bloomberg. Their exclusion reflects a broader trend of underperforming companies being replaced by those with stronger fundamentals and clearer growth trajectories.

What This Means for Investors

For investors tracking the Nasdaq 100 through ETFs or mutual funds, the reshuffle is a crucial event. The inclusion of new companies often leads to increased demand for their shares, as passive funds adjust their holdings to match the new index composition according to Bloomberg. This can result in short-term volatility for affected stocks. For example, Alnylam's recent stock price target increase to $508 by Stifel suggests growing investor confidence in the company's potential as a new index component according to Investing.com.

The reshuffle also raises questions about the future of companies like Strategy Inc. and its potential exclusion. While some analysts doubt it will be removed due to its relatively large market cap, others argue that its business model does not align with traditional technology firms. If it is excluded, it could face significant outflows from index-tracking funds according to Channel News Asia. This highlights the importance of aligning with the index's criteria to maintain long-term investor support.

Walmart's recent switch to the Nasdaq from the New York Stock Exchange has also sparked speculation about its potential inclusion in the index. However, it missed the cutoff date for consideration in the 2025 reshuffle, meaning it will likely be evaluated in future reconstitutions. This underscores the strict eligibility criteria that companies must meet to be included in the index, including listing dates and market capitalization thresholds.