If you've followed financial news, you've probably heard headlines such as, "The Nasdaq closed higher today," or "Technology stocks pushed the Nasdaq lower."

But what exactly is the Nasdaq, and why do investors around the world pay so much attention to it?

The Nasdaq Stock Exchange is one of the largest stock exchanges in the world and is home to many of the biggest publicly traded companies, including Apple, Microsoft, NVIDIA, Amazon, Alphabet, and Meta Platforms. Because many of its listed companies operate in technology and innovation-driven industries, the Nasdaq is often viewed as a key indicator of how technology stocks are performing.

Whether you're just beginning your investing journey or looking to better understand the US stock market, learning about the Nasdaq is an important step.

What is the Nasdaq?

The Nasdaq (National Association of Securities Dealers Automated Quotations) is a US stock exchange where investors buy and sell shares of publicly traded companies.

Launched in 1971, it became the world's first fully electronic stock exchange, replacing the traditional trading floor model with a computerized trading system. Today, it is one of the largest exchanges globally by market value and plays an important role in the global financial system.

Although the Nasdaq is widely associated with technology companies, businesses from healthcare, consumer services, industrials, financial services, and other sectors are also listed on the exchange.

How Does the Nasdaq Work?

A stock exchange is a marketplace where buyers and sellers trade shares of publicly listed companies.

When a company meets the Nasdaq's listing requirements, its shares become available for trading by investors through licensed brokers and investment platforms.

Trading on the Nasdaq takes place electronically, allowing orders to be matched quickly without a physical trading floor.

Like other major exchanges, share prices fluctuate throughout the trading day based on supply and demand, company performance, economic conditions, and investor sentiment.

Which Companies Trade on the Nasdaq?

Many globally recognized businesses are listed on the Nasdaq Stock Exchange.

Examples include:

• Apple
• Microsoft
• NVIDIA
• Amazon
• Alphabet
• Meta Platforms
• Tesla
• Broadcom

These companies operate across different industries, although technology stocks make up a significant portion of the exchange's market value.

The list of companies changes over time as businesses are added, delisted, or move between exchanges.

What is the Nasdaq Composite?

The Nasdaq Composite is a stock market index that tracks the performance of most companies listed on the Nasdaq Stock Exchange.

Because it includes thousands of companies across multiple sectors, it provides a broad view of the performance of the exchange.

Investors often follow the Nasdaq Composite to understand overall market trends, particularly within technology and growth-oriented businesses.

While the Nasdaq Composite focuses on companies listed on the Nasdaq Stock Exchange, the S&P 500 tracks 500 of the largest publicly traded companies across the US market. If you're new to stock market indices, read our guide on What is the S&P 500?

What is the Nasdaq-100?

The Nasdaq-100 is different from the Nasdaq Composite.

Instead of tracking most listed companies, it measures the performance of 100 of the largest non-financial companies listed on the Nasdaq.

Many well-known technology companies are included in this index, making it a popular benchmark for investors seeking exposure to innovative and growth-focused businesses.

Nasdaq vs. NYSE: What's the Difference?

Although both the Nasdaq and the New York Stock Exchange (NYSE) are major US stock exchanges, they differ in how they operate and the types of companies they typically attract.

The Nasdaq is a fully electronic exchange and is widely known for listing many technology and growth-oriented companies. Some of its best-known listed companies include Apple, Microsoft, NVIDIA, Amazon, and Meta.

The NYSE, on the other hand, combines electronic trading with designated market makers who help facilitate trading. It has a broad mix of established companies across a wide range of industries, including Coca-Cola, IBM, Walmart, JPMorgan Chase, and The Home Depot.

While the Nasdaq is often associated with technology companies and the NYSE with more traditional, established businesses, both exchanges list some of the world's largest and most successful publicly traded companies. A company's decision to list on one exchange rather than the other does not necessarily indicate that it is a better investment. Investors typically evaluate companies based on factors such as their financial performance, business model, growth prospects, and valuation, not solely on where their shares are listed.

Why Do Investors Follow the Nasdaq?

The Nasdaq is one of the most closely watched parts of the US stock market because it includes many companies that influence global technology, artificial intelligence, cloud computing, e-commerce, and digital communications.

Investors monitor the Nasdaq to:

• Understand broader market trends
• Track the performance of technology stocks
• Assess investor sentiment
• Follow earnings announcements from major companies
• Monitor innovation-led sectors of the economy

Because many large technology companies are listed on the exchange, the Nasdaq often receives significant media attention during earnings season and major economic events.

Can You Invest in the Nasdaq?

You cannot invest directly in the Nasdaq Stock Exchange because it is a marketplace rather than a single investment.

However, investors can gain exposure by investing in:

• Exchange-traded funds (ETFs) that track Nasdaq indices
• Index funds linked to the Nasdaq-100 or Nasdaq Composite
• Individual companies listed on the exchange
• Some investment platforms also allow you to buy fractional shares, which means purchasing a portion of a company's stock rather than a whole share. Learn more in our guide, What Are Fractional Shares?

Each approach carries different levels of diversification and risk. As with any investment, values can rise or fall, and past performance is not a guarantee of future results.

Things to Keep in Mind

While the Nasdaq includes many of the world's largest companies, investing always involves risk.

Technology stocks, in particular, may experience periods of higher price volatility than the broader market. Company earnings, interest rates, inflation, and global economic conditions can all influence stock prices.

Understanding how the Nasdaq works can help you interpret market news, but investment decisions should be based on your own objectives, risk tolerance, and research.

Read Also: Your first investment, a step-by-step walkthrough

Final Thoughts

The Nasdaq is more than a stock exchange; it is a central part of the global financial system and a key barometer of the US stock market.

Home to many of the world's most influential companies, the Nasdaq helps investors track market trends, understand the performance of technology stocks, and follow developments across innovative industries.

Whether you're exploring investing for the first time or expanding your knowledge of financial markets, understanding the Nasdaq provides valuable context for interpreting market movements and company news.