The technology sector has been a driving force behind the bull market, with growth-heavy exchange-traded funds (ETFs) like Invesco QQQ Trust (QQQ) and Invesco NASDAQ 100 ETF (QQQM) seeing significant returns in recent years. With both communication services and technology posting returns exceeding 50% over the past three years, investors are now wondering if the groups are due for a pullback.
However, market observers believe that technology equities will lead again this year, potentially providing support for ETFs like QQQ and QQQM. The “magnificent seven” stocks in these funds have been key drivers of their success, but some analysts predict that 2025 will see the tech rally broaden, benefiting these ETFs.
Goldman Sachs Asset Management notes that they are optimistic about positive returns on investment among “hyperscalers” driven by artificial intelligence (AI) buildouts. They also see encouraging dynamics in software companies and ASIC semiconductor companies, which could provide ballast to the sector.
The analysts highlight the importance of capital allocation discipline among major tech companies, which would lead to increased spending on AI-related initiatives. As a result, software companies can benefit from partnering with frontier model providers and capitalizing on their vast data sets.
Overall, the combination of AI-driven spending trends and the strong fundamentals of the technology sector support the potential for growth in ETFs like QQQ and QQQM.
Source: https://www.etftrends.com/etf-education-channel/tech-can-be-tops-again-in-2025