Though it encountered some hiccups last month amid fears the Federal Reserve isn’t done raising interest rates, tech remains one of this year’s best-performing sectors. Some analysts believe there’s more upside to come for the S&P 500’s largest sector weight.
Should that assessment prove accurate, exchange traded funds such as the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM) stand to benefit. The two funds are among the primary ETF beneficiaries of this year’s artificial intelligence (AI) investing renaissance. Many market observers believe it is a harbinger of another tech revolution that could propel the sector higher for years to come.
“We believe key solid results/guidance last night from the likes of tech stalwarts Salesforce, Okta, and Crowdstrike reinforce our thesis that a modestly improving IT spending environment on the heels of this ‘1995-like AI Revolution‘ creates a bullish set up for tech stocks into year-end and 2024,” according to Wedbush. “We believe tech stocks rip higher into year-end with the new tech bull market here.”
QQQM Relevant for the Long-Term
Wedbush’s 1995 mention harkens to the early days of the consumer internet/e-commerce boom. Some investors considering QQQ and QQQM may be leery of that comparison. What was in style in the mid- to late 1990s ultimately burst, in dramatic fashion.
However, QQQ and QQQM member firms are better positioned today to endure bubble speculation as many holdings in the ETFs are among the most cash-rich firms in Corporate America. Wedbush’s adulation for the AI boom doesn’t end with the 1995 comparison. The research firm joined an array of counterparts in noting this could be another iPhone moment for the tech sector.
That speaks to long-term demand attributable to AI and other sources. This could stoke upside for chip makers, cloud computing firms, and software producers, among others. All of those industries are well-represented in QQQ and QQQQM.
“It all comes down to growth in the tech space and what do true Street numbers ultimately look like into 2023, this remains the key focus in our opinion for investors,” concluded Wedbush.
With long-term perspectives in mind, QQQM is compelling because its annual fee is just 0.15%. That’s the equivalent of $15 per year on a $10,000 investment. It’s five basis points less than the expense ratio found on the older QQQ.
For more news, information, and analysis, visit the ETF Education Channel.
