Palantir, MicroStrategy Likely To Join Nasdaq 100; Will Moderna, Super Micro Get The Axe?

The Nasdaq 100 index is set for a significant shakeup in its December 2024 rebalancing, with Palantir Technologies and MicroStrategy expected to join the prestigious list, while Moderna and Super Micro Computer may face removal. This article explores the financial performances and market dynamics that contribute to these potential changes.

Palantir Technologies, with a market capitalization of $167.03 billion, has seen a remarkable surge since 2020, driven by its software platforms for intelligence and counterterrorism operations. Its revenue growth of 0.3% and forward P/E ratio of 156.43 reflect its robust financial health. MicroStrategy, valued at $81.6 billion, has also experienced a 125% increase since 2020, thanks to its strategic investments in Bitcoin and business intelligence software. Its forward P/E ratio of 14.57 indicates strong investor confidence. Both companies' impressive market capitalizations and financial performances make them strong candidates for the Nasdaq 100.

Market capitalization and liquidity play a crucial role in these companies' potential inclusion. Palantir, with a market cap of $161.5 billion, is the largest non-index company, making its inclusion likely. Its high liquidity, with an average daily volume of 14.5 million shares, ensures manageable trading volumes upon inclusion. MicroStrategy, valued at $81.6 billion, also meets the size requirement. However, its lower liquidity, with an average daily volume of 2.3 million shares, may pose challenges during index rebalancing.

The inclusion of Palantir and MicroStrategy is expected to significantly impact the Nasdaq 100's sectoral distribution and market capitalization. Currently, the technology sector dominates the index, accounting for approximately 55% of its total market capitalization. With Palantir's market cap of $167.03 billion and MicroStrategy's $81.6 billion, their addition will further bolster the technology sector's weight, potentially pushing it closer to 60%. This shift could lead to increased investment in technology stocks, as index-tracking funds adjust their portfolios to match the new composition. Additionally, the combined market capitalization of the Nasdaq 100 is projected to rise by around $25 billion, reflecting the growing influence of these tech giants in the market.



The potential removal of Moderna and Super Micro could significantly reduce the index's exposure to biotechnology and semiconductor industries. As of December 2024, these two companies contribute approximately 1.5% and 0.5% of the index's total market capitalization, respectively. Their departure could lead to a decrease in the index's exposure to these sectors, potentially impacting the performance of related ETFs and funds tracking the Nasdaq 100. However, the exact impact will depend on the companies that replace them, as the index aims to maintain a balanced representation of growth-oriented sectors.



In conclusion, the upcoming Nasdaq 100 rebalancing is set to bring significant changes, with Palantir and MicroStrategy likely to join the index and Moderna and Super Micro potentially facing removal. These shifts will have implications for the index's sectoral distribution, market capitalization, and the performance of related ETFs and funds. Investors should closely monitor these developments and adjust their portfolios accordingly to capitalize on the evolving market landscape.