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Just For You As Tech Earnings Grow, This ETF Still Hasn't Caught UpWritten by Jessica Mitacek. Published: 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 already made me a "wealthy man"
Despite the tech sector’s struggles this year, the companies that comprise that corner of the market continue to demonstrate strong financial health. Driven by intensifying demand for artificial intelligence (AI), tech companies—particularly the Magnificent Seven—have posted robust earnings growth, record revenue, and management guidance that reflects confidence across industries from cloud computing and cybersecurity to fintech and semiconductors. Your electric bill is up 42% since 2019, and utilities requested $31 billion in rate hikes last year alone. The culprit: AI data centers consuming power at a scale the grid was never designed to handle. The last time a bottleneck like this formed, three overlooked infrastructure stocks surged 1,700%, 1,900%, and 900% before Wall Street caught on. One analyst has identified the next candidate - earlier in the cycle, smaller, and positioned at a chokepoint that even the largest players cannot build around. See the one infrastructure stock Wall Street is about to chase Although investors have rotated out of tech since Q4 2025, analysts continue to raise their earnings forecasts for 2026, and many Q1 results easily exceeded Wall Street’s expectations. Stock prices, however, have yet to catch up with 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 weakest showing among the Magnificent Seven, though all seven are down in 2026. However, tech is approaching oversold territory; once it bottoms and reverses, shares should eventually close the gap with those strong financial results. For now, that means exchange-traded funds (ETFs) that track the tech sector—like the Invesco NASDAQ 100 ETF (NASDAQ: QQQM)—may offer a timely opportunity to get ahead of the rebound. Despite Earnings Growth, QQQM Has Been Mostly Flat Reflecting its tech-heavy holdings, QQQM is down nearly 5% YTD. Despite a more than 19% gain over the past year, the fund has traded in a tight range since early September 2025. Although those companies reported blowout earnings, the market has often reacted negatively—whether due to valuation concerns or fears of an AI bubble. Investors’ fickle emotions don’t change income statements. Consider NVIDIA—the largest holding in QQQM with a current weighting of about 8.80%—which, despite a YTD loss of more than 7%, is showing no signs of slowing. In fact, among the fund’s top five holdings, four companies reported sizable quarterly earnings-per-share (EPS) growth, listed below in order of their weightings: The only exception is Tesla (NASDAQ: TSLA), which reports Q1 earnings on April 28. It’s reasonable to argue that QQQM is simply biding its time before breaking out of its range. Institutional owners may already anticipate that: institutional selling rose to $1.84 billion in Q4 2025 but was outpaced by institutional buying of $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 mega-cap Magnificent Seven have muted the strong performances of stocks further down QQQM's holdings. Micron (NASDAQ: MU), the ETF’s 11th-largest holding with a weighting of 2.53%, has been one of the fund’s strongest performers this year after continuing to exceed investors’ expectations following a nearly 217% gain in 2025. Semiconductor equipment maker Applied Materials (NASDAQ: AMAT), with a 1.50% weighting, has also turned in an impressive run this year after gaining 54% in 2025. By and large, the ETF is composed of large tech names that have been laggards 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, leaving them behind the S&P 500 this year. However, though tech accounts for nearly 47% of the fund, it also includes household names from sectors that have performed much better this year. Consumer staples, which make up more than 8% of the fund, are the fifth-best performer among S&P sectors in 2026. Walmart (NYSE: WMT) and Costco (NASDAQ: COST) comprise 3.24% and 2.36% of the ETF’s portfolio, respectively, and have been notable contributors as defensive, high-quality retailers have held up better than many growth names. Meanwhile, communication services account for another 14.6% of QQQM’s holdings, while consumer discretionary adds 13.4%. Therefore, while investors wait for tech’s rebound, the fund’s often-overlooked diversification offers built-in hedges that have offset some of the larger positions’ YTD losses. | 
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