Apple, Microsoft and Alphabet: Even More Overvalued After Nasdaq 100 Rebalancing?

investing.com:

It's no secret that large U.S. tech companies have experienced a reduction in their weighting on the Nasdaq 100 index after the 'special' rebalancing. The weightage of the 7 biggest companies in the index has decreased from 56% to 44%.

As we make our way through earnings season, with some companies having already reported and others yet to do so, there's a lingering question on many minds. People are contemplating whether these influential companies, which played a pivotal role in the market's recovery from the October 2022 lows, still have room for growth or if a downturn awaits them.

While we can't claim to foresee the future with absolute certainty, we'll delve into a thorough analysis of the top 3 companies using InvestingPro.

Let's begin with Apple (NASDAQ:AAPL), the largest holding in Warren Buffett's portfolio. The company has surged to all-time highs since the beginning of the year, and its upward trajectory suggests the potential for reaching even higher levels in the near future.

Valuation-wise, the stock appears to be on the expensive side, with a 14.5% premium (without the famous «margin of safety»). However, its financial health score is 4 out of 5, taking all elements into account, where the only concern lies in its relatively high valuation.

Source: InvestingPro

Source: InvestingPro

As for Microsoft Corporation (NASDAQ:MSFT), chart-wise, we are currently retesting the highs at $345. However, a decisive breakthrough has not occurred yet. Today's quarterly earnings call could play a crucial role, either providing the boost needed for further upward movement or potentially leading to a double-high scenario if the stock retraces.

Both Apple and Microsoft find themselves in the overvalued territory today,