SpaceX Could Tilt S&P 500 Investors Toward Nasdaq‑100

With Space Exploration Technologies (NASDAQ:SPCX) touching down on the Nasdaq 100, it’s no longer a wash when investors are choosing between the S&P 500 and Nasdaq 100. Undoubtedly, there’s a lot of overlap between the two indices, but the Nasdaq 100 takes the mega-cap tech exposure to another level entirely.

With the S&P 500 holding off on adding SpaceX so soon after its IPO, allowing enough time for seasoning and a shift into profitability, questions linger as to whether the Nasdaq 100’s allocation to SpaceX will beckon investors who would have otherwise put money in an S&P 500 ETF.

Indeed, for younger investors who don’t mind added volatility for a shot at greater growth, the answer is simple. Any way you look at it, the Nasdaq fast-track is a big win that not only further differentiates it from the S&P 500 but might just cause some to view the tech-heavy index as the new go-to index to bet on the broad markets.

The Nasdaq’s SpaceX fast-track just changed the passive investment game

After all, with SpaceX going for a market of around $2 trillion, it’s quite the needle mover that’s in the league of the Magnificent Seven. And if Elon Musk can deliver, there’s no telling how much further up the ranks the firm can fly. Who knows? If orbital data centers are the future of AI compute, perhaps it’s not all too far-fetched to envision SpaceX rising to become the world’s largest company.

Of course, there’s a lot of promise, and only time will tell if the company can continue its ascent now that it’s landed on public markets with a fairly hefty price of admission.

Arguably, the company could smash past earnings and still move lower, given the frothy valuation and broad distaste for AI-related CapEx, something I outlined in prior pieces. In any case, the choice between the S&P 500 and Nasdaq 100 might ultimately come down to whether one wants a piece of SpaceX.

SpaceX’s road to a $10 trillion market cap?

Indeed, there are tremendous downside risks, but, at the same time, the fear of missing out (FOMO) is a powerful force. And there’s no telling where shares of Space Exploration Technologies could go if orbital data centers and next-generation AI help the firm grow to become a $10 trillion company.

With some of the biggest bulls on Wall Street looking for the shares to surpass the $400 per-share mark, perhaps the biggest risk for younger investors with time on their side is not getting that piece of SpaceX in these earlier, riskier days.

Of course, one could always just buy the S&P 500 with some shares of SpaceX on the side. But, for the most part, I do think the Nasdaq 100’s decision to fast-track Elon Musk’s space titan is a winning move that could help it gain a leg up over the S&P 500, especially as the AI rally goes into overdrive and the revolution enters a monetization phase.

The tech-heavy Nasdaq is about to become tech-heavier

In my view, the Nasdaq 100 suddenly became that much more exciting than the S&P 500. For those looking for the new economy plays rather than a more diversified mix with a greater emphasis on profitability, I think the Nasdaq 100 may very well be the “new” default investment option for a generation of new investors who want to go for growth. Indeed, perhaps a bit of added volatility is worth stomaching if it means owning a piece of the future economy.

In other words, embracing greater choppiness to skate towards where the puck is headed next. Time will tell if the SpaceX fast-track benefits Nasdaq 100 holders or not, but either way, the AI IPO wave to come makes the paths forward for the S&P and Nasdaq 100 look vastly different. Does one gravitate towards the explosive, hyper-growth firms earlier on? Or wait until they’re seasoned and de-risked enough?

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