It may be a difficult week for some of the country’s leading tech stocks. Yesterday brought news that the Nasdaq 100 is getting ready to adjust the weighting of its components. The index consists of 100 non-financial sector securities that trade on the Nasdaq. Of these 100, though, 55% of the index’s weight is made up of seven leading tech stocks, including Tesla (NASDAQ:TSLA), Amazon (NASDAQ:AMZN) and Nvidia (NASDAQ:NVDA). This means that things could be about to shift for the Magnificent Seven, as they are known. TSLA stock is down today as anticipation mounts. It is likely to struggle alongside the rest of its peers until the weighting changes are revealed on July 14. They will take effect on July 24 before markets open.
Should investors be bracing for a difficult road ahead as the Magnificent Seven companies prepare for the weighting adjustment? Let’s take a closer look at this recent development and assess what it means for these leading tech stocks.
What’s Happening With TSLA Stock
While TSLA stock is currently trading in the red, it has been highly volatile all day. As of this writing, it is down 0.40% for the day after multiple dips and surges. However, its current trajectory suggests that it will likely dip further soon. Investors should note that the company also received a positive update yesterday when Jefferies analyst Philippe Houchois upgraded his TSLA stock price target from $185 to $265. The fact that it is falling in the face of good news suggests that the market isn’t reacting well to the looming Nasdaq 100 adjustment.
Does this mean that the mega-cap stocks of the magnificent seven will be severely impacted? Not according to Investor’s Business Daily. As the outlet notes:
“The Nasdaq 100 special rebalance will spur stock allocation shifts among ETFs such as QQQ and mutual funds that track the index. So there could be some one-off gains or losses, perhaps as the planned changes are announced on July 14.”
However, it also notes that these impacts are likely to be modest. If that is the case, TSLA stock and its peers aren’t likely to be pushed down by too much as the market adjusts to the new weighting. InvestorPlace reports that Nvidia is unlikely to be impacted. There’s no reason to believe that things will be any different for Tesla. There are other reasons to be against the electric vehicle (EV) leader, such as concerning price swings and high volatility. However, the pending Nasdaq 100 adjustment isn’t one of them.
On the date of publication, Samuel O’Brient did not have (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.
