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Oracle bumps Microsoft as top tech stock in CNBC IQ 100

  • 3M and Oracle are the two highest-weighted companies in the CNBC IQ 100 Index.
  • Oracle moves up on the strength of its cloud and cybersecurity plays.
  • JPMorgan Chase and Dow Chemical fall out of the top five.

The CNBC IQ 100 Index gained 9.13 percent in the first half of 2017, outpacing the S&P 500's 8.24 percent gain.

As part of its rules-based methodology, the index has been re-weighted for the third quarter. 3M and Oracle are now the two highest-weighted companies in the index. Microsoft lost its spot as the top-weighted company and is now tied for fifth-highest weight with C R Bard and International Paper. MCAM International, the firm whose proprietary algorithms power the CNBC IQ 100, executed the re-weighting for CNBC.

"What you have in Oracle is a focus on cloud accessibility, interoperability, and more importantly, security," MCAM founder David Martin said on CNBC's Squawk Alley Monday. "The more we hear about cybersecurity, the more we hear about those internal issues around how people are managing and interacting with data, the more Oracle is going to be in a very compelling position going forward."

Oracle shares gained more than 30 percent in the first half of the year. On Wednesday, an analyst at KeyBanc Capital suggested the stock had more room to run.

3M's weighting may have been helped by a recent FDA decision to allow expanded usage of its Tegaderm wound care brand. According to MCAM, this is an example of how a company can deploy its intellectual property to open up new market opportunities.

The companies in the CNBC IQ 100 Index are weighted according to each one's ability to invest in, develop, control and deploy intellectual property to achieve strategic advantage over competitors. Companies with the highest weighting maintain this type of advantage across multiple industries. 3M is considered one of the most diverse companies in the index, with strong competitive advantages in chemicals, materials, electronics, medical, and consumer products, according to MCAM.

With the re-weighting, Boeing moves from fourth place to third, while chipmaker Micron Technology slipped from second to fourth. JPMorgan Chase and Dow Chemical are now out of the top five.

The CNBC IQ 100 Index is re-weighted quarterly, and components are rebalanced annually.

CR Bard was the biggest second-quarter gainer among the 100 stocks in the index. Shares of the medical device maker jumped 27 percent in the second quarter, with most of the gain coming on news that broke in April that it will be acquired by Becton Dickinson, also an IQ 100 component.

Oilfield services company Nabors Industries was the IQ 100's biggest loser in the second quarter, tumbling more than 37 percent.

NetNet

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