The sharp rise in Nvidia's stock price (stock code: NVDA) is forcing a rebalance of the Technology Select Sector SPDR Fund (XLK), significantly altering the investment weights of the three tech giants.

According to Matthew Bartolini, head of SPDR Americas Research, under current maximum weight rules, these stocks' proportions are restricted from dominating the fund. Post-adjustment, Microsoft (ticker: MSFT) and Nvidia will each comprise about 21% of the fund, while Apple's (stock code: AAPL) weight will decrease to around 4.5%. This means XLK will need to purchase over $10 billion worth of Nvidia shares and substantially reduce its holdings in Apple.

As of June 14th, Microsoft and Apple each constituted approximately 22% of XLK, with Nvidia at just 6%. This rebalancing will greatly increase Nvidia's share and significantly decrease Apple's. It demonstrates significant changes even in passive index funds under extreme market conditions.

According to FactSet data as of Monday, June 17th, Microsoft, Nvidia, and Apple all have market capitalizations exceeding $3.2 trillion, with a gap of less than $5 billion between them. Though calculations vary slightly, it reflects the fierce competition in market capitalization among these three companies.

The Technology Select Sector index uses a float-adjusted market capitalization methodology, which considers stocks held by certain major shareholders that do not trade frequently. For instance, Berkshire Hathaway's Warren Buffett holds over 5% of Apple shares, affecting Apple's weight in the index calculation. This rebalancing, effective this weekend and lasting a quarter, will proceed regardless of Apple's performance relative to Nvidia during this period.

On Monday, Apple's stock rose 2%, while Nvidia's fell slightly by 0.7%, reflecting investor expectations and adjustments ahead of the upcoming rebalancing.