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This Month's Bonus Content As Tech Earnings Grow, This ETF Still Hasn't Caught UpSubmitted 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 Musk's $1 Quadrillion AI IPO
Despite the tech sector’s struggles this year, its companies continue to show strong financial health. Driven by rising demand for artificial intelligence (AI), tech companies—particularly those in the Magnificent Seven—have posted strong earnings growth, record revenue and confident guidance across industries from cloud computing and cybersecurity to fintech and semiconductors. For a moment… Forget about Trump's ties to Israel. Forget about reports of Iran's nuclear program. Because my research has led me to believe we're risking World War 3 with Iran for a completely different reason. Click here to find out what it is. Although investors have rotated out of tech since Q4 2025, analysts have continued to raise 2026 earnings forecasts, and many Q1 results have beaten Wall Street 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 worse. Microsoft (NASDAQ: MSFT), for example, has fallen more than 20% YTD—the worst among the Magnificent Seven—even though all those stocks are down in 2026. Tech appears to be approaching oversold territory; once it bottoms and reverses, share prices should eventually catch up to fundamentals. For now, that means exchange-traded funds (ETFs) that track the tech sector—like the Invesco NASDAQ 100 ETF (NASDAQ: QQQM)—could offer an opportunity to get ahead of a rebound. Despite Earnings Growth, QQQM Has Been Mostly Flat Reflecting the performance of the tech giants in its portfolio, QQQM is down nearly 5% YTD. Although the fund logged more than a 19% gain over the past year, it has traded in a tight range since early September 2025. Despite blowout earnings from many of its names, the market has repeatedly reacted negatively—possibly due to valuation concerns or fears of an AI bubble. Investors' fickle sentiment doesn't alter income statements. NVIDIA—the largest holding in QQQM at a current weighting of 8.80%—despite being down more than 7% YTD, shows little sign of slowing down. In fact, when looking at the fund’s top five holdings, four companies reported sizable quarterly earnings per share (EPS) growth, listed below in order of their respective weightings: The only exception is Tesla (NASDAQ: TSLA), which reports Q1 earnings on April 28. It’s plausible QQQM is merely waiting to break out of its range. Institutional investors may have anticipated that: although institutional selling rose to $1.84 billion in Q4 2025, institutional buying totaled $3.09 billion, suggesting smart money bought the sell-off. Outside of the Mag 7, QQQM Holds a Mix of Outperformers and Underperformers The YTD losses among the Magnificent Seven have masked strong performances by smaller holdings deeper in 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 expectations following a nearly 217% gain in 2025. Similarly, semiconductor equipment maker Applied Materials (NASDAQ: AMAT), with a 1.50% weighting, has followed an impressive run after gaining 54% in 2025. However, the ETF is still dominated by large tech names that have lagged since the start of Q4. Beyond the Magnificent Seven, underperformance from Palantir (NASDAQ: PLTR) and Broadcom (NASDAQ: AVGO) has also weighed on QQQM, as both have trailed the S&P 500 this year. While the fund heavily tilts to tech (nearly 47%), it also includes household names from sectors that have performed better so far in 2026. Consumer staples, which make up more than 8% of the fund, are the fifth-best performing S&P 500 sector in 2026. Walmart (NYSE: WMT) and Costco (NASDAQ: COST) make up 3.24% and 2.36% of the ETF’s portfolio, respectively, and have acted as defensive contributors as high-quality retailers held up better than many growth names. Communication services account for 14.6% of QQQM’s holdings, while consumer discretionary adds 13.4%. So, while investors wait for tech to rebound, the fund's diversification provides built-in hedges that have offset some of the larger positions' YTD losses. | 
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