On the bright side, analysts expect the incoming Trump Administration is likely to focus more on big tech’s alleged interference with free speech. It may pay less attention to the size and dominant market positioning of companies like Alphabet and Meta.
Schwab rated the broader tech sector “marketperform,” noting that the group holds some richly valued companies. However, that’s been the case for some well-known QQQ/QQQM holdings this year and it hasn’t weighed on performance.
“Information Technology tends to do well when strong economic growth encourages companies to invest in technology upgrades and consumers to buy new devices. Some of the larger members are not in the ‘long-duration’ camp—companies expected to produce their highest cash flows in the future—given they have current earnings growth and strong cash positions,” added Schwab.
The brokerage is reserved in its assessment of consumer discretionary, in part citing concentration risk in the sector. However, if Amazon (AMZN) and Tesla (TSLA) shine in 2025, that could benefit QQQ and QQQM as those stocks combine for about 10% of the ETFs’ weights.
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