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Additional Reading from MarketBeat.com
As Tech Earnings Grow, This ETF Still Hasn't Caught UpAuthored by Jessica Mitacek. Article Posted: 3/26/2026. 
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.
- Special Report: Elon’s “Hidden” Company
Despite the tech sector’s struggles this year, the companies that make up that corner of the market continue to demonstrate strong financial health. Driven by rising demand for artificial intelligence (AI), tech companies—particularly the Magnificent Seven—have reported robust earnings growth, record revenue, and confident guidance from management across industries, from cloud computing and cybersecurity to fintech and semiconductors.
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While investors have been rotating out of tech since Q4 2025, analysts continue to raise earnings forecasts for 2026, and many Q1 results have 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 starker. Microsoft (NASDAQ: MSFT), for example, has fallen more than 20% YTD—the worst among the Magnificent Seven—even though all of those stocks are down in 2026. Tech appears to be approaching oversold territory; once it bottoms and reverses, shares could begin to close the gap with the industry’s strong fundamentals. For now, that makes exchange-traded funds (ETFs) that track the tech sector—such as the Invesco NASDAQ 100 ETF (NASDAQ: QQQM)—an attractive way to position ahead of a potential rebound. Despite Earnings Growth, QQQM Has Been Mostly FlatReflecting its large tech holdings, QQQM is down nearly 5% YTD. Although it is up more than 19% over the past year, the fund has traded in a tight range since early September 2025. Even as the tech giants in its portfolio reported blowout earnings, the market has repeatedly reacted negatively—perhaps due to valuation concerns or fears of an AI bubble. That disconnect between price and profit is evident with NVIDIA—the fund’s largest holding at a current weighting of 8.80%—which, despite a YTD loss of more than 7%, shows no signs of slowing down. Looking at the fund’s top five holdings, four companies posted sizable quarterly earnings per share (EPS) growth (listed here in order of their weightings):
The only exception is Tesla (NASDAQ: TSLA), which reports Q1 earnings on April 28. All of this suggests QQQM may simply be biding its time before breaking out of its range. Institutional investors may already be positioning for that: although institutional selling rose to $1.84 billion in Q4 2025, it was outpaced by $3.09 billion in institutional buying as the smart money bought the sell-off. Outside of the Magnificent Seven, QQQM Holds a Mix of Outperformers and UnderperformersThe YTD losses among the mega-cap Magnificent Seven have muted the standout performances of some stocks deeper in QQQM’s portfolio. Micron (NASDAQ: MU), the ETF’s 11th-largest holding at a 2.53% weighting and one of the fund’s top performers this year, has continued to exceed investors’ expectations after a nearly 217% gain in 2025. Similarly, semiconductor equipment maker Applied Materials (NASDAQ: AMAT), with a 1.50% weighting, has turned in an impressive run this year after gaining 54% in 2025. Overall, the ETF is dominated by large tech names that have lagged since the start of Q4. In addition to the beaten-up Magnificent Seven, underperformance from Palantir (NASDAQ: PLTR) and Broadcom (NASDAQ: AVGO) has also weighed on QQQM relative to the S&P 500 this year. However, while the fund tilts heavily toward tech (nearly 47% of its portfolio), it also holds household names from sectors that have performed markedly better in 2026. Consumer staples, which make up more than 8% of the fund, are the fifth-best performing sector in the S&P this year. Walmart (NYSE: WMT) and Costco (NASDAQ: COST) account for 3.24% and 2.36% of the ETF’s portfolio, respectively, and have acted as defensive contributors while many growth names struggled. Communication services represent another 14.6% of QQQM’s holdings, while consumer discretionary adds 13.4%. So, as investors await tech’s rebound, the fund’s often-overlooked diversification provides built-in hedges that have helped offset the larger positions’ YTD losses. |
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