Every December, the Nasdaq conducts its annual reconstitution of the Nasdaq-100 Index—a reshuffling that forces hundreds of billions of dollars in index-tracking funds to buy and sell stocks in lockstep. This year's changes, effective December 22, are particularly notable for what they reveal about shifting market leadership.

Who's In

Six companies are joining the elite index of the 100 largest non-financial companies on the Nasdaq:

  • Alnylam Pharmaceuticals (ALNY) - The biotech pioneer in RNA interference therapeutics
  • Ferrovial (FER) - The Spanish infrastructure giant that moved its listing to New York
  • Insmed (INSM) - A biopharma company focused on rare diseases
  • Monolithic Power Systems (MPWR) - A semiconductor company riding the power management boom
  • Seagate Technology (STX) - The storage veteran benefiting from AI data demands
  • Western Digital (WDC) - Another storage play capitalizing on explosive data growth

Who's Out

Six companies are being removed:

  • Biogen (BIIB) - The biotech giant whose Alzheimer's drug hasn't delivered hoped-for results
  • CDW Corporation (CDW) - The IT solutions provider
  • GlobalFoundries (GFS) - The chipmaker that couldn't keep pace with AI winners
  • Lululemon Athletica (LULU) - The athleisure icon that's lost nearly half its value this year
  • ON Semiconductor (ON) - The chipmaker facing cyclical headwinds
  • The Trade Desk (TTD) - The programmatic advertising platform

Why Index Changes Matter

The Nasdaq-100 underpins more than 200 tracking products with over $600 billion in assets globally, including the wildly popular Invesco QQQ Trust (QQQ). When the index adds or removes a stock, every fund tracking it must rebalance—creating mechanical buying and selling pressure that has nothing to do with fundamentals.

For stocks being added, this typically means a wave of buying as index funds accumulate shares. For stocks being removed, the opposite occurs: forced selling that can temporarily depress prices regardless of the company's actual business performance.

What the Changes Reveal

This year's reconstitution tells a clear story: data storage is hot, athleisure is not. The addition of both Seagate and Western Digital reflects the insatiable demand for storage driven by AI training, cloud computing, and the explosion of digital content. Meanwhile, Lululemon's removal caps a brutal year for the yoga-pants pioneer.

The Bottom Line

Index reconstitution creates short-term volatility that savvy investors can either avoid or exploit. If you own stocks being removed, consider whether the forced selling creates a buying opportunity or a reason to exit. If you're eyeing stocks being added, remember that some of the buying pressure may already be priced in. The changes take effect December 22—mark your calendar.