Arm's stock price, included in the NASDAQ 100 Index, surged 6% at one point, hitting a record high

NASDAQ announced on Thursday evening that Arm Holdings' stock will replace Sirius XM Holdings before trading begins on June 24, entering the NASDAQ-100 Index and several other NASDAQ component stock indices. The news caused Arm's stock price to surge by 6% in early trading on Friday, reaching a historic high before turning lower.

Currently, the market value of the UK chip manufacturer Arm exceeds $160 billion, while the satellite radio company Sirius XM has a market value of 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 the market value of its component stocks to be at least 0.1% of the total market value, which is approximately $22 trillion for the NASDAQ-100 Index.

Arm will also be included in the NASDAQ-100 Equal Weight Index, NASDAQ-100 Technology Sector Index, NASDAQ-100 Technology Sector Market-Cap Weighted Index, and NASDAQ-100 Technology Sector Adjusted Market-Cap Weighted Index.

The NASDAQ-100 Index is rebalanced quarterly and reconstituted annually in December. However, changes in the weights of component stocks may occur due to changes in the number of shares and other factors, and the replacement of component stocks may coincide with rebalancing.

Earlier reports indicated that if Sirius XM is removed from the NASDAQ-100 Index, related index adjustments could lead to the sale of 75 to 100 million shares of Sirius XM stock, accounting for 2% to 3% of its total outstanding shares.

On Thursday, Sirius XM's stock price fell by 3.6% to $2.54, hitting a 52-week low. The stock continued to decline by 0.2% in Friday's trading. Speculation about being removed from the NASDAQ-100 Index has caused Sirius XM's stock to drop by over 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 in early trading on Friday, hitting a historic high before quickly falling by 2.29% to $158.42. The stock has already risen by over 130% year-to-date.

Earlier this month, analysts at Rosenblatt reiterated their "buy" rating on Arm in a report to clients, with a target price of $180, stating that they believe the company is a top long-term choice alongside NVIDIA.

The analyst from the institution stated, "We believe that the positive ARM PC showcased at last week's Computex exhibition and the overall computing theme will benefit the increasing popularity of the company's IP."

At the Computex exhibition, ARM's CEO made bold claims, saying, "I believe that within the next five years, ARM's market share in Windows may exceed 50%." He also predicted that by the end of 2025, there will be 1 trillion 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, sales of WoA (Windows on ARM) PC chips will reach 50 million units, bringing in $10 billion in PC CPU revenue.

Analysts believe that if ARM's initiatives are successful, the market will face a "reshuffle." This presents a huge opportunity for processor manufacturers such as Qualcomm and MediaTek, who have deep expertise in the ARM architecture field over the years. With the gradual resolution of ARM's ecosystem issues and the accelerated performance improvement of Qualcomm chips, ARM's layout in the PC sector will speed up