The Nasdaq-100 is a stock index that represents the 100 largest non-financial companies listed on the Nasdaq Stock Market. This index is well-known for its concentration in the technology sector, including giants like Apple, Microsoft, and Amazon. Its performance is often seen as an indicator of the health of the technology sector and innovation in the United States.
Recent Performance of the Nasdaq-100
In 2024, the Nasdaq-100 exhibited positive performance, with an annual return of 25.88% as of December 31, 2024.
This result was primarily driven by technology companies that benefited from trends such as artificial intelligence and the expansion of cloud computing.
Annual Index Restructuring
On December 13, 2024, Nasdaq announced the annual restructuring of the Nasdaq-100, which took effect on December 23, 2024. In this restructuring, three new companies were added to the index:
- Palantir Technologies Inc. (PLTR): specializes in data analytics software.
- MicroStrategy Incorporated (MSTR): known for its business intelligence solutions and Bitcoin investments.
- Axon Enterprise, Inc. (AXON): provides technology solutions for law enforcement, including recording devices and management software.
At the same time, three companies were removed from the index:
- Illumina, Inc. (ILMN): specializes in DNA sequencing technologies.
- Super Micro Computer, Inc. (SMCI): provides server and storage solutions.
- Moderna, Inc. (MRNA): known for its mRNA vaccine against COVID-19.
These changes reflect the evolution of the market and the index’s adaptation to companies with the best performance and market capitalizations.
Implications for Investors
Changes to the Nasdaq 100 index can impact investors in various ways. Companies added to the index often see an increase in demand for their shares, as many indexed funds and ETFs rebalance their portfolios to reflect the updated composition of the index. For example, the Invesco QQQ Trust, one of the most popular ETFs tracking the Nasdaq-100, recorded a return of 30% in 2024.
On the other hand, companies removed from the index may experience a decrease in demand for their shares, as investors might reduce their exposure to these companies. However, it is important to note that inclusion or exclusion from an index does not solely determine a company’s success or failure; other fundamental factors must be considered.
Future Outlook
Looking ahead, the Nasdaq-100 will continue to be a crucial barometer for the technology sector and innovation. Emerging trends, such as artificial intelligence, biotechnology, and sustainability, could influence the composition of the index and the performance of its components. Investors should closely monitor these developments and consider how they align with their long-term investment goals.
Palantir Technologies Inc. is a U.S. company specializing in data analytics, known for its advanced software solutions used by governments and businesses to extract meaningful insights from large volumes of data. In 2024, Palantir’s shares saw a significant increase, gaining 379% and bringing its market capitalization to $188.1 billion.
Outlook for 2025
Forecasts for 2025 are mixed. According to analyst Dan Ives from Wedbush, the increase in investments in artificial intelligence (AI) could benefit Palantir, with a projected 25% growth for technology stocks in 2025.
However, some analysts express concerns regarding Palantir’s high stock valuation, which currently trades at a price-to-earnings ratio of 174.9, significantly higher than Nvidia’s (32.6).
Financial Analysis
In the third quarter of 2024, Palantir reported revenues of $726 million, a 30% increase compared to the previous year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose by 39% to $283.6 million. Despite these positive results, some analysts believe that the current stock valuation does not fully reflect the company’s fundamentals.
Conclusions
The outlook for Palantir in 2025 depends on several factors, including the evolution of the AI market, the company’s ability to maintain and expand its government and commercial contracts, and the management of its market valuation. Investors should closely monitor these developments to assess the company’s future potential.
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