Finance
3 min read

NASDAQ

A US stock exchange known for its concentration of technology and growth companies. The Nasdaq Composite Index tracks all stocks listed on the exchange.

What NASDAQ is

NASDAQ — originally an acronym for National Association of Securities Dealers Automated Quotations — is one of the world's largest stock exchanges by market capitalization of listed companies.

A few key facts:

  • Founded 1971 as the world's first electronic stock market.
  • Lists ~3,000+ companies with significant tech-sector concentration.
  • Combined market cap of listed companies in the tens of trillions.
  • Headquartered in New York.
  • Operating company is publicly traded (NDAQ).

NASDAQ vs. NYSE

The two major US exchanges:

  • NYSE — older; traditionally industrial and large-cap. Hybrid floor and electronic.
  • NASDAQ — fully electronic; tech-heavy.

Many of the world's largest tech companies trade on NASDAQ: Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, Tesla. The two exchanges compete actively for new listings; both have evolved to look more similar over time.

Major NASDAQ indices

Several indices:

  • NASDAQ Composite — all NASDAQ-listed stocks (3,000+).
  • NASDAQ-100 — 100 largest non-financial NASDAQ stocks. Underlies QQQ ETF.
  • NASDAQ Biotechnology Index.
  • Various specialty indices.

The NASDAQ-100 (often called "the NASDAQ" colloquially) has become a major proxy for tech-stock performance.

QQQ — the NASDAQ ETF

The Invesco QQQ ETF tracks the NASDAQ-100:

  • Launched 1999.
  • One of the largest ETFs by assets ($300B+ as of recent years).
  • Highly liquid — among the most-traded ETFs globally.
  • Tech-heavy — top holdings dominate index weight.
  • Strong long-run performance especially in 2010s and 2020s.

QQQ effectively provides leveraged exposure to mega-cap tech for those wanting tech-tilted equity allocation.

NASDAQ listing requirements

To list on NASDAQ, companies must meet specific standards:

  • Minimum share price ($4 per share for major NASDAQ tier).
  • Minimum public float ($45M+ market value).
  • Minimum corporate governance standards.
  • Minimum financial criteria.

Companies that fall below standards face delisting warnings and eventual delisting if not corrected.

NASDAQ tiers

Multiple listing tiers:

  • NASDAQ Global Select Market — highest standards.
  • NASDAQ Global Market — middle tier.
  • NASDAQ Capital Market — entry tier.

Each has different listing requirements and ongoing standards.

Major NASDAQ moments

A few worth knowing:

  • 2000 dot-com peak — NASDAQ Composite peaked around 5,048 in March 2000; subsequently fell 78% over the next 2-3 years.
  • 2015 — recovery — NASDAQ Composite finally recovered to its 2000 peak after 15 years.
  • 2021 — new high — NASDAQ Composite reached over 16,000 driven by tech mega-caps.
  • 2022 — sharp decline — fell over 30% from peak as rates rose.
  • 2024 — new highs — driven by AI-related stocks.

Tech concentration

NASDAQ's tech focus produces specific dynamics:

  • Strong performance when tech outperforms.
  • Sharp drawdowns during tech-specific stress (2000, 2022).
  • Concentration in mega-caps — top 10 stocks make up enormous fraction of major NASDAQ indices.

This makes NASDAQ a high-beta exposure to tech specifically, beyond just being a US equity market.

Pre-market and after-hours trading

NASDAQ supports extended-hours trading:

  • Pre-market — typically 4 AM to 9:30 AM ET.
  • Regular hours — 9:30 AM to 4 PM ET.
  • After-hours — typically 4 PM to 8 PM ET.

Liquidity is much thinner outside regular hours; spreads wider; price moves can be extreme.

NASDAQ as a company

The NASDAQ exchange operator (NDAQ) is itself a public company:

  • Listed on NASDAQ.
  • Revenue from listing fees, market data, technology services.
  • Public since 2002.
  • Diversified into market technology and financial software beyond just exchange operation.

What individuals should know

For investors:

  • Tech-heavy exposure is implicit in NASDAQ-tracking funds.
  • Higher volatility than broader US market.
  • Concentration risk — index dominated by handful of mega-caps.
  • Strong long-run performance but with painful drawdowns.

For investors looking at QQQ specifically:

  • Compare to broader US market (VTI, VOO).
  • Consider concentration risk.
  • Recognize cyclicality of tech-heavy exposure.

NASDAQ has been one of the great wealth-creation engines of modern markets, particularly through its mega-cap tech listings. But it carries specific characteristics — concentration, volatility, sector tilt — that investors should understand before treating NASDAQ exposure as equivalent to broad US equity exposure.