Huge tech ETF set to buy $10 billion in Nvidia shares
Posted: Jun 18, 2024
- $XLK ETF is set to buy $10 billion worth of shares in $NVDA - The ETF is reducing its exposure to $AAPL - This move is to comply with changes in the S&P Dow Jones Technology Select Sector index - $NVDA recently became the most valuable company in the world - $MSFT and $NVDA will share the top spot in the ETF and index, with $AAPL becoming the runner-up - The ETF had 22.5% in $MSFT, 21% in $AAPL, and only 6% in $NVDA, causing underperformance - After rebalancing, $MSFT and $NVDA will both have a 21% weighting, while $AAPL will drop to 4.5% - $NVDA shares were up 3.7% at $135.85, while $AAPL shares were down 1.5% at $213.33 - Only two of the top technology companies can have a full 21% weight in the ETF, with others capped at 4.5% - This situation is unprecedented in the history of the ETF's portfolio.
🚨 Reddit sentiment: mixed/negative - While some see the purchase positively for driving up stock prices, others believe it to be insignificant or an opportunity for big players to exit. Summarized comments: - A $10 billion stock purchase drives up stock prices and you end up with way more than a $10 billion increase in market cap - The situation feels like exit liquidity for big players - It's a nothing-burger because it's an ETF buying shares to match the S&P - The purchase comes into effect on Monday, after hours for Friday Stock tickers discussed: $NVDA
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