Arm Joins Nasdaq 100, Stock Soars 6% to Record High

Nasdaq announced on Thursday evening in Eastern Time that Arm Holdings' stock will replace Sirius XM Holdings in the Nasdaq-100 Index and several other Nasdaq-listed stock indices before trading begins on June 24th.

The news caused Arm's stock to surge by 6% in early trading on Friday, reaching an all-time high, but it later turned down.

Currently, the market value of the British chipmaker Arm exceeds $160 billion, while the market value of the satellite broadcasting company Sirius XM is only $10 billion.

Nasdaq did not provide a specific reason for the replacement, but according to media reports, Sirius XM may be removed because its market value has fallen below 0.1% of the total market value of the Nasdaq-100 Index.

The index requires its constituent stocks to maintain a market value of at least 0.1% of the total market value, with the Nasdaq-100 Index's market value being approximately $22 trillion.

Arm will also join the Nasdaq-100 Equal Weight Index, the Nasdaq-100 Technology Sector Index, the Nasdaq-100 Technology Sector Market Capitalization Weighted Index, and the Nasdaq-100 Technology Sector Adjusted Market Capitalization Weighted Index.

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The Nasdaq-100 Index is rebalanced quarterly and restructured annually in December. However, when the weights of constituent stocks are adjusted based on changes in the number of shares and other factors, the replacement of constituent stocks may occur concurrently with rebalancing.

Media previously reported that if Sirius XM is removed from the Nasdaq-100 Index, the related index adjustments could lead to the sale of 75 million to 100 million shares of Sirius XM, accounting for 2% to 3% of its total circulating shares.

On Thursday, Sirius XM's stock price fell by 3.6% to $2.54, setting a new 52-week low. The stock continued to decline by 0.2% during trading on Friday.

Due to speculation about being removed from the Nasdaq-100 Index, Sirius XM's stock has fallen by more than 50% this year, making it the worst-performing stock in the index.Due to its inclusion in the NASDAQ-100 Index, Arm may benefit from related index buying. Arm's stock surged by 6% to $167.69 at the open on Friday, hitting a record high, but then quickly turned down by 2.29%, closing at $158.42. The stock has risen by over 130% so far this year.

Earlier this month, analysts at Rosenblatt reiterated their "buy" rating and $180 target price for Arm in a report to clients, telling investors that they consider the company to be a top long-term choice alongside NVIDIA.

The analysts stated, "We believe that the positive ARM PC and overall computing themes showcased at last week's Computex trade show will benefit the increasing popularity of the company's IP."

At the Computex trade show, ARM's CEO made bold predictions, saying, "I believe that within the next five years, ARM's market share in Windows could exceed 50%." He also forecasted that by the end of 2025, there will be 100 billion AI devices using ARM processors.

Currently, Qualcomm, NVIDIA, AMD, and MediaTek are all collaborating with Microsoft and have successively launched processor products based on the ARM architecture. Morgan Stanley previously estimated that by 2027, WoA (Windows on ARM) PC chip sales will reach 50 million units, generating $10 billion in PC CPU revenue.

Analysts believe that if ARM's push is successful, the market will face a "reshuffling." For processor manufacturers like Qualcomm and MediaTek, which have a deep accumulation in the ARM architecture field for many years, it represents a huge opportunity. As ARM's ecosystem issues are gradually resolved and Qualcomm's chip performance accelerates, ARM's layout in the PC field will speed up.