Company Earnings to Watch When Trading the Nasdaq Index

Did you know that the tech-dominated Nasdaq 100 includes 8 non-financial sectors? When trading an index, you first need to understand its composition and the impact of the constituting stocks. Let’s take a deep dive into how the Nasdaq 100 may end Q4 2024 after the most influential companies on the index released their Q3 earnings.

Unpacking the Nasdaq 100

The impact of each constituent stock on a weighted index depends on the weight calculation methodology. The Nasdaq 100 follows a modified weight approach, using the market capitalisation of companies listed exclusively on the NASDAQ stock exchange. The modified approach ensures that a single stock, such as that of an industry leader like Nvidia, does not heavily influence the index. The Nasdaq 100 is rebalanced regularly to maintain its integrity and reliability as a benchmark. Index traders must also watch out for quarterly rebalancing. This ensures that your speculations on the index, based on a company or a sector, are based on accurate metrics.

Most Influential Tech Companies on Nasdaq 100

As of June 2024, The technology segment accounts for 62.25% of the Nasdaq 100. Among these are tech giants with a market cap of over $3 trillion that you must keep your eye on. Here’s a look:

Apple  

Market Cap: $3.45 trillion

Share in Nasdaq 100: 9.01%

The consumer electronics leader surpassed Wall Street expectations in Q4 2024. The reported EPS was $1.64 while total revenue grew 6% year-over-year.

The company expects low-to-mid single-digit growth in Q4 2024. Apple also announced that new features, such as a more comfortable watchband and AI-powered sleep apnoea detectors, were expected to power growth going forward. A lower-than-expected forward guidance disappointed investors, which reflected in the share price. The stock price declined almost 2% after the results were released.

Nvidia

Market Cap: $3.6 trillion

Share in Nasdaq 100: 8.18%

Nvidia is scheduled to report its results for the quarter ending October 2024 on November 20. This will be the chip giant’s first earnings call after becoming the world’s most valuable company, when its market cap reached $3.34 trillion on June 18, 2024. As the race to $4 trillion begins between Nvidia and Apple, index traders must ready themselves for a possible shuffle between the top two stocks on Nasdaq’s weightage list.

Due to the company’s strong fundamentals, analysts expect Nvidia to announce EPS growth of 84.4%. Softbank’s announcement to use the company’s Blackwell chips to build Japan’s largest AI supercomputer could further propel growth. However, supply constraints persist. If these issues intensify, the chipmaker could lose its 7-quarter streak of beating Wall Street expectations. While investors widely expect the company to post positive forward guidance, keeping an eye on its short-term targets is critical, given the headwinds from the supply chain. Nvidia is a bellwether for the AI industry, and significantly impacts the Nasdaq 100 and S&P 500 indices.

Microsoft

Market Cap: $3.17 trillion

Share in Nasdaq 100: 7.89%

Microsoft’s revenue increased 16% y-o-y for the first fiscal quarter of 2025, with EPS beating the consensus at $3.30. The company issued a clear picture of Azure adoption, excluding mobility, security and Power BI data. This indicates the growing confidence in its cloud platform. The company’s finance chief, Amy Hood, said “Demand continues to be higher than our available capacity.” This might be a sign that the company is planning on building its smart cloud capacity. Microsoft’s share price grew 11.90% YTD, as of November 18, 2024, significantly lower below the Nasdaq 100’s 26.31% growth during the same period.

The company gave a disappointing forward guidance, amid slowing profit growth. Consequently, the company’s stock lost 6% and dragged the Nasdaq 100 2.4% lower the following day. This makes it important to keep an eye on company earnings releases during index trading.

The Under $3 Trillion Brigade

Broadcom

Market Cap: $795.77 billion

Share in Nasdaq 100: 5.34%

With rising demand across its AI portfolio and positive revisions in the earnings estimates, Broadcom’s share price is set to trend upwards. Bank of America’s analysts expect the company’s revenues to grow at a whopping CAGR of 30%-35% in the coming years. The company may play a key role in driving the Nasdaq 100 and S&P 500 higher with its bright prospects.

Meta Platforms

Market Cap: $1.46 trillion

Share in Nasdaq 100: 5.17%

Meta’s profits soared through Q3 2024, registering 34% growth, thanks to its AI initiatives. The company issued an optimistic forward guidance on the back of AI-powered immersive developments and strong advertising revenue. However, as AI expenses rise, the bottom line may get affected. Releasing the earnings on the same day as Microsoft, the positive sentiment around Meta failed to provide any meaningful support to the Nasdaq 100.

Amazon

Market Cap: $2.22 trillion 

Share in Nasdaq 100: 4.99%

The leading e-commerce player expects its net sales to grow between 7% and 11% in Q4 2024, compared to the 2023 levels. Amazon’s cloud-computing division is expected to drive this growth. The company might also focus on developing nuclear technology projects to support the cloud. However, Amazon’s growth-induced positive momentum in the stock market did not survive for long, with the stock losing 3.39% after briefly spiking by 5%.

To Sum Up:

• Nasdaq 100 index uses modified weightage by market capitalisation.
• The index is a tech-heavy one with the technology sector accounting for 62.25% of its composition.
• Experienced traders consider the performance of the most heavy-weight stocks while index trading since they have a more pronounced impact on the Nasdaq 100.
• The top 3 companies that Nasdaq 100 traders watch are Apple, Nvidia and Microsoft.
• However, there are other key company to follow, including Broadcom, Meta Platforms and Amazon.

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