ETFs
Nasdaq ETFs expected to continue their growth in 2024
The tech-heavy Nasdaq Composite Index has hit a series of record highs in recent weeks, fueled by tech stocks driven by artificial intelligence (AI) optimism and the relentless rally in NVIDIA’s NVDA. New bets on rate cuts add to the momentum.
As such, ETFs that track the index are the center of attention. These include Invesco QQQ QQQ, Invesco NASDAQ 100 ETF QQQM, First Trust NASDAQ-100 Equal Weight Index Fund QQEW, Invesco NASDAQ Next Generation 100 ETF QQQJ and Direxion NASDAQ-100 Equal-Weighted Index Stocks QQQE.
Another rally to come?
Most of the rally is driven by “Magnificent Seven”. The three stocks – NVIDIA, Apple (AAPL) and Microsoft (MSFT) – of the “Magnificent Seven” group are in a race to become the most valuable company in the world and have reached a market capitalization of $4 trillion thanks to growing enthusiasm for AI capabilities (read: ETFs to mine as NVIDIA becomes most valuable company).
The expansion of AI applications promises to pave the way for new growth opportunities. According to a new report from Grand View Research, the global artificial intelligence market is expected to witness a CAGR (2024-2030) of 36.6% to reach $811.75 billion by 2030. NVIDIA has been at the at the forefront of integrating AI into its products and services. . Its success is largely attributed to its leadership in the development of advanced graphics processing units (GPUs), unrivaled in the production of processors powering artificial intelligence systems, including generative AI, the technology that underpins ChatGPT’s OpenAI and which can create text, images and other media.
Apple, which was far behind its competitors in AI adoption, is finally catching up after launching the brand new AI feature called Apple Intelligence for iPhone, iPad and Mac at its recent Worldwide Developers Conference. The introduction of many AI-based features is expected to kick off the next upgrade cycle, improving the company’s performance and restoring investor confidence in Apple.
Meanwhile, Microsoft has invested billions of dollars in AI in a bid to drive growth, particularly in its cloud computing services, and is now reaping the rewards. About 65% of Fortune 500 companies use the Azure service that provides OpenAI technology to businesses. Demand for generative AI will continue to fuel Microsoft’s cloud business. The software company is now focusing on AI transformation through its new offerings like Microsoft Copilot. “Microsoft Copilot and Copilot Stack are orchestrating a new era of AI transformation, driving better business outcomes across all roles and industries,” said Microsoft CEO Satya Nadella (read: ETF Face-off technology: Apple versus Microsoft).
The Fed, at its last meeting, forecast one rate cut for this year and plans four cuts in 2025. The central bank changed the language of its statement, noting that there has been “further modest progress toward committee’s 2% inflation target. .” Previously, the statement had highlighted a “lack” of further progress. This heralds a period of higher interest rates for a while. Tech titans have shown strong resilience in the face of such a scenario. And when the Fed begins cutting rates later this year, tech stocks will get a boost. Since the technology sector relies on borrowing to achieve higher growth, it is cheaper to borrow more money for new initiatives when interest rates are low.
The story continues
Focus on ETFs
Invesco QQQ (QQQ)
Invesco QQQ provides exposure to the 101 largest domestic and international non-financial companies listed on Nasdaq by tracking the Nasdaq 100 Index. It is one of the largest and most popular ETFs in the large-cap space, with $291 billion in assets under management and an average daily volume of 33 million shares. Invesco QQQ charges investors 20 basis points in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium Risk Outlook.
Invesco NASDAQ 100 ETF (QQQM)
The Invesco NASDAQ 100 ETF is the same as QQQ, tracking the NASDAQ-100 Index, but has a 15 basis point lower annual fee. It holds 103 stocks in its basket, with a higher concentration on the top company. The Invesco NASDAQ 100 ETF has accumulated $29 billion in its asset base and trades an average daily volume of 1.5 million shares. It has a Zacks ETF Rank #2 (Read: Buy 5 Growth ETFs as Fed Stays Put and Considers Rate Cut).
First Trust NASDAQ-100 Equal Weight Index Fund (QQEW)
Holding 101 stocks, the First Trust NASDAQ-100 Equal Weighted Index Fund provides equal exposure to stocks in the Nasdaq-100 Equal Weighted Index. She accumulated $2.1 billion in assets while trading moderate volumes of 76,000 shares per day on average. The First Trust Equal-Weighted NASDAQ-100 Index Fund charges 57 basis points in annual fees and carries a Zacks ETF Rank #3 (Hold) with a Medium Risk Outlook.
Invesco NASDAQ Next Gen 100 ETF (QQQJ)
The Invesco NASDAQ Next Gen 100 ETF tracks the NASDAQ Next Generation 100 Index, which includes securities of the next generation of Nasdaq-listed non-financial companies, that is, the 100 largest companies listed on Nasdaq outside of the NASDAQ-100 index. In total, the product holds 105 titles. The Invesco NASDAQ Next Gen 100 ETF charges 15 basis points in annual fees and sees a good trading volume of almost 90,000 shares per day. With $655.7 million in assets under management, QQQJ has a Zacks ETF Rank #3.
Direxion NASDAQ-100 Equal-Weighted Index (QQQE) Stocks
Direxion NASDAQ-100 Equal Weighted Index stocks provide equal-weighted exposure to the NASDAQ-100 Index by tracking the NASDAQ-100 Equal Weighted TR Index. It has raised $1.2 billion and trades an average daily volume of 212,000 shares. Equal-weighted Direxion NASDAQ-100 Index stocks charge 35 basis points in annual fees and have a Zacks ETF Rank #3.
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NVIDIA Corporation (NVDA): Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
First Trust NASDAQ-100 Equal Weight ETF (QQEW): ETF Research Reports
Direxion NASDAQ-100 Equal-Weighted Index (QQQE) Stocks: ETF Research Reports
Invesco NASDAQ Next Gen 100 ETF (QQQJ): ETF Research Reports
Invesco NASDAQ 100 ETF (QQQM): ETF Research Reports