The Invesco QQQ Trust (QQQ) is one of the most widely recognised and traded exchange-traded funds (ETFs), offering investors exposure to the Nasdaq-100 Index. The ETF tracks the Nasdaq-100 Index, providing investors access to the performance of the 100 largest non-financial companies listed on the Nasdaq, spanning various sectors but with a strong focus on technology and growth-oriented industries.
Launched in March 1999, QQQ has gained popularity as a benchmark for the technology sector’s performance and is frequently used by investors seeking exposure to high-growth companies like Apple, Microsoft, Nvidia, and Amazon, as well as other tech-focused companies.
Leading into the final month of 2024, QQQ’s total market value stood at $310.80 billion.
Nasdaq QQQ Forecast
For long-term investors bullish on technology and innovation, QQQ is a compelling choice. However, those with a shorter investment horizon or lower risk tolerance may want to consider ETFs with broader sector representation, such as SPY or VTI.
Bull Argument: With Donald Trump winning the US election, analysts at Wedbush predicted a strong bullish reaction from tech stocks, highlighting the positive effects of a “red sweep” in Congress. In the note, written before Trump’s election win, Wedbush said they believe the Trump administration would prioritise AI initiatives in the US. This is expected to benefit prominent tech companies.
The focus on artificial intelligence is anticipated to be “front and center in our view and benefit Big Tech,” Wedbush stated. The firm, which is extremely bullish on tech stocks, said in a September note that tech stocks are set for a double-digit rally by the end of 2024, with an even stronger bull market in 2025. “In a nutshell, we believe the stage is set for tech stocks to move 10% or more higher into year-end and another 20% in 2025 as this tech bull market enters its next phase, led by the AI Revolution,” they said at the time.
Bear Argument: According to a November 23 report from Bloomberg, citing Kevin Brocks of 22V Research, “Demand for far out-of-the-money put options on the S&P 500, technology-heavy Nasdaq 100 Index and small-cap Russell 2000 Index has risen to levels last seen during the heavy volatility ahead of the election.”
Furthermore, in September, Morgan Stanley’s chief U.S. equity strategist,Mike Wilson, told Bloomberg that the AI investment excitement has diminished, a factor that could impact tech stocks and the Nasdaq-100. “A lot of those stocks have really come off. And that makes sense to me. We just got overcooked on the whole AI theme,” commented Wilson at the time.
Our View: The Invesco QQQ Trust (QQQ) is a flagship ETF for investors seeking exposure to growth-oriented industries and market-leading companies. While its concentrated exposure to technology and high-growth sectors provides significant upside potential, it also introduces higher volatility compared to more diversified funds.
Invesco QQQ Trust Performance
| Year | Performance |
|---|---|
| 2024 (YTD) | +24.05% |
| 2023 | +54.85% |
| 2022 | -32.58% |
| 2021 | +27.42% |
| 2020 | +48.62% |
QQQ has delivered robust returns over the years (despite the 2022 dip), reflecting the dominance of technology companies in driving market performance.
ETFs Comparison
QQQ Top Holdings (Dec, 2024)
The technology sector makes up 59.78% of the ETF, with the consumer discretionary sector next at 18.28%.
The top 10 holdings make up 51.1% of the ETF.
| Company | Allocation |
|---|---|
| Nvidia | 8.81% |
| Apple | 8.51% |
| Microsoft | 7.52% |
| Amazon | 5.10% |
| Broadcom | 4.81% |
| Meta Platforms | 4.80% |
| Tesla | 4.02% |
| Costco | 2.68% |
| Netflix | 2.44% |
| Alphabet (Class A) | 2.41% |
Who Should Buy the QQQ ETF?
The Invesco QQQ ETF is ideal for individuals seeking capital appreciation through exposure to technology and other high-growth sectors, while investors with a bullish outlook on the transformative potential of AI, cloud computing, digital platforms, and other technologies, may also see the ETF as an investment opportunity.
Furthermore, given its liquidity and popularity, QQQ is a favourite among day traders and options traders. According to Invesco, the QQQ ETF is “the second most traded ETF based on average daily US volume traded.”
On the other hand, the QQQ may not suit risk-averse investors as its reliance on tech-heavy industries makes it more volatile, especially during market downturns.
Dividend-focused investors may also want to look elsewhere as many Nasdaq-100 companies reinvest profits rather than paying high dividends.
