What Is the Nasdaq 100 Index?

What Is the Nasdaq 100 Index?

Let me explain the Nasdaq 100 Index directly to you: it aggregates the largest 100 nonfinancial companies listed on the Nasdaq exchange, covering industries like technology, healthcare, and consumer staples. It excludes financial sector companies but still gives you a diverse view of the market's most actively traded entities.

This index uses a modified market capitalization approach to balance the influence of its biggest members. Nasdaq reviews the composition periodically and makes adjustments to ensure no single company or small group dominates the performance. You can see why this makes the Nasdaq 100 a key indicator if you're looking for broad exposure to top companies across sectors.

Key Takeaways

Here's what you need to know: the Nasdaq 100 Index consists of the 100 largest nonfinancial companies on the Nasdaq exchange. Companies must meet criteria like being listed on Nasdaq and having a minimum average daily trading value of $5 million. The index employs a modified market cap method to balance weights and avoid overconcentration. You can access it through ETFs, mutual funds, and futures. Special rebalancings happen when weights get too concentrated, with the latest in 2023 due to tech stock rallies.

Exploring the Structure and Criteria of the Nasdaq 100

For a security to be included in the Nasdaq 100, it must be listed exclusively on a Nasdaq exchange—these can be common stocks, ordinary shares, American depositary receipts, or tracking stocks. They have to be nonfinancial and traded for at least three months.

Each one needs a minimum average daily trading value of $5 million over the past three months, but there's no market cap requirement. The index is built with a modified capitalization method, weighting items by market cap while limiting the largest companies' influence to keep things balanced.

Nasdaq reviews this quarterly and adjusts weights if needed to meet distribution requirements.

Breakdown of Sectors in the Nasdaq 100

The Nasdaq 100 covers various sectors except financial services, with eight in total as of Sept. 2, 2025. Technology leads at 62.48%, followed by consumer discretionary at 18.62%, healthcare at 4.57%, industrials at 4.00%, telecommunications at 4.08%, consumer staples at 2.58%, basic materials at 1.59%, utilities at 1.36%, and energy at 0.50%.

How Special Rebalancing Impacts the Nasdaq 100

Nasdaq did a special rebalancing on July 24, 2023, adjusting component weights to cut overconcentration on a few large companies. Rules require this if stocks over 4.5% each total more than 48% of the index.

This has only happened twice before, in 1998 and 2011. The 2023 one was due to rallies in tech stocks and Tesla, pushing the top five—Microsoft, Apple, Nvidia, Amazon, and Tesla—over 48%. It reduced their weights and boosted others like Alphabet, Meta Platforms, Netflix, and Costco.

You might expect this to affect performance and volatility, as investors adjust portfolios. Volatility didn't spike, but there was a short decline—likely just following the broader market, since prices rose market-wide in October 2023.

Investment Opportunities in the Nasdaq 100

The Nasdaq 100 is the list of the largest 100 companies by modified market cap on Nasdaq exchanges. You don't have to buy each stock individually; there are options like ETFs, mutual funds, futures, options, or annuities that track its performance. For most investors, ETFs offer the simplest and least risky way to get exposure.

What Companies Make the Nasdaq 100?

The Nasdaq 100 includes the 100 largest companies by modified market cap on Nasdaq, in sectors like consumer goods, healthcare, technology, and utilities.

What Does Nasdaq 100 Stand for?

Nasdaq 100 is short for the Nasdaq 100 Index, covering the 100 largest nonfinancial companies by modified market cap on a Nasdaq exchange.

Is Nasdaq 100 a Buy or Sell?

Whether to buy or sell depends on your market outlook, goals, and risk tolerance—consult a financial advisor to check if it fits your situation.

The Bottom Line

The Nasdaq 100 Index targets the largest 100 nonfinancial companies on Nasdaq exchanges. It's diversified, giving you a broad market overview across sectors. If you're after exposure to major global companies, invest via ETFs, mutual funds, futures, options, or annuities.