As Tech Earnings Grow, This ETF Still Hasn't Caught Up

Key Points

• Despite strong earnings growth and record revenue driven by AI demand, the tech sector is down nearly 5% year-to-date, creating a disconnect between company health and share prices.
• The QQQM is trading in a tight range and approaching oversold territory, offering investors an entry point before tech stock prices catch up to their financial performances.
• While mega-cap Mag 7 stocks have struggled recently, QQQM’s exposure to steady performers in consumer staples and communication services has helped offset tech-sector volatility.

Despite the tech sector’s struggles this year, the companies that comprise that corner of the market continue to demonstrate superior financial health. 

Driven by intensifying demand for artificial intelligence (AI), tech companies—particularly those in the Magnificent Seven—have seen strong earnings growth, record-setting revenue, and guidance that is projecting confidence from management teams across industries, from cloud computing and cybersecurity to fintech and semiconductors.

While investors have been rotating out of tech since Q4 2025, analysts continue to raise their earnings forecasts for 2026. And, as was seen in Q1, the results in many cases easily exceeded Wall Street’s expectations.

Stock prices, however, have yet to catch up to that earnings growth. As a whole, the tech sector is down nearly 5% year-to-date (YTD), making it the fourth-worst performer among the S&P 500’s 11 sectors.

On an individual basis, the picture is much worse. Microsoft NASDAQ: MSFT, for example, has fallen more than 20% YTD—the worst among the Magnificent Seven, despite all of those stocks being in the red in 2026. 

But tech is approaching oversold territory, meaning that once it bottoms and reverses, shares will eventually close the gap with those strong financial performances.

For now, that means exchange-traded funds (ETFs) that track the tech sector—like the Invesco NASDAQ 100 ETF NASDAQ: QQQM—are offering a tremendous opportunity to get ahead of the rebound. 

Despite Earnings Growth, QQQM Has Been Mostly Flat

Reflecting the performance of the tech giants in its portfolio, the QQQM is down nearly 5% YTD. And despite a more than 19% gain over the past year, the fund has traded in a tight range since early September 2025. 

At the same time, the tech giants among its holdings have reported blowout earnings. But whether due to valuation concerns or fears of an AI bubble, time and time again, the market has reacted negatively. 

But investors’ fickle emotions have no impact on income statements. Look no further than NVIDIA—the largest holding in the QQQM with a current weighting of 8.80%—which, in spite of a YTD loss of more than 7%, is showing no signs of slowing down.

In fact, when looking at the fund’s top five holdings, four of those companies saw sizable quarterly earnings per share (EPS) growth, including the following in order of their respective weightings: 

• NVIDIA NASDAQ: NVDA: 95.56%
• Apple NASDAQ: AAPL: 18.33%
• Microsoft NASDAQ: MSFT: 59.75%
• Amazon NASDAQ: AMZN: 13.60%

The only exception is Tesla NASDAQ: TSLA, which reports Q1 earnings on April 28. 

By extension, it would be easy to make an argument that the QQQM is simply biding its time before breaking out of its rangebound status. That is something that institutional owners may have already anticipated. Despite institutional selling ticking up in Q4 2025 to the tune of $1.84 billion, it was still outpaced by institutional buying of $3.09 billion as the smart money took advantage of the sell-off.  

Outside of the Mag 7, QQQM Holds a Mix of Outperformers and Underperformers

Those aforementioned YTD losses among the mega-cap Magnificent Seven companies have muted the noteworthy performances of stocks further down in the QQQM's portfolio. 

Micron NASDAQ: MU, the ETF’s 11th largest holding with a weighting of 2.53% and one of the fund’s strongest performers so far this year, has continued to exceed investors’ expectations following a nearly 217% gain in 2025. 

Better yet, semiconductor equipment manufacturer Applied Materials NASDAQ: AMAT, with a 1.50% weighting, has also turned in an impressive run this year after gaining 54% in 2025.     

But by and large, the ETF is composed of enormous tech names that have been laggards since the start of Q4. In addition to the beaten-up Magnificent Seven stocks, the QQQM has also been held in place by underperformances from Palantir NASDAQ: PLTR and Broadcom NASDAQ: AVGO, which have notably trailed the S&P 500 this year.

However, while the fund may have a heavy slant towards tech (nearly 47% of its entire portfolio), it also holds household names from sectors that have seen markedly better performances this year. 

Consumer staples, which make up more than 8% of the fund, is the fifth best-performer in the S&P in 2026. Walmart NYSE: WMT and Costco NASDAQ: COST make up 3.24% and 2.36% of the ETF’s portfolio, respectively, and have been notable contributors this year as defensive, high-quality retailers have held up better than many growth names.

Meanwhile, communication services account for another 14.6% of the QQQM’s holdings, while consumer discretionary adds 13.4%. So while investors wait for tech’s rebound, the fund’s under-reported diversification offers built-in hedges that have offset the larger positions’ YTD losses.