It's hard to find a space with more “victims” of the artificial intelligence (AI) disruption trade than software. That weakness is permeating multiple sub-segments, including cloud computing, cybersecurity and more.
It seems like hardly a day goes by without Anthropic's Claude artificial intelligence (AI) tool disrupting some corner of the technology sector, causing share price declines in the process. Last week's “victim” was the cybersecurity industry.
Investors seeking dedicated AI exposure face a structural problem: the biggest AI beneficiaries aren't always the household names dominating broad tech indexes.
The tech-heavy Nasdaq-100 Index (NDX) is off nearly 1.8% year-to-date. By no means is that a dramatic decline, particularly amid a five-year gain of more than 82%.
Domestic stocks aren't particularly cheap by historical standards, but through a historical lens, U.S. equities aren't alarmingly overvalued. Still, some investors might think it's difficult to find credibly undervalued names.
Investors well-versed in artificial intelligence (AI) goings on know semiconductors are integral in this equation. That's one of the reasons why so many advisors and investors embrace Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM).
Semiconductors are the lynchpins of the artificial intelligence (AI) revolution. Still, this is just the tip of the iceberg when it comes to semiconductor investment implications.
The Invesco QQQ Trust's constituent stocks trade at 41.5 times earnings, according to Invesco's fund literature. AI-driven capital expenditure is pressuring free cash flow at tech companies, with FCF declining or stagnating, contrary to the reported earnings trend. Extended GPU depreciation schedules overstate reported earnings, making FCF more accurate than earnings for big tech companies.
QQQ leans heavily into technology and has delivered a higher 1-year return but comes with higher risk and a lower dividend yield SPY tracks the broad S&P 500, offering greater sector diversification and a lower expense ratio Both ETFs are extremely liquid, but QQQ's max drawdown and volatility run higher than SPY's We're bullish on these 10 stocks ›
QQQ's flat performance since October reflects technical adjustments tied to rate-cut expectations rather than fundamentals, implying the ETF is currently undervalued and likely to rally with Q4 earnings—thereby invalidating JEPQ's. Using QQQ instead of JEPQ yields a 13% effective distribution rate, generating $243 in additional monthly income—or $928 if entered during the April tariff-driven drawdown. I expect QQQ to bottom near, or before, $590, based on a recurring pattern observed since October 2025 around FOMC meetings.
When most investors think of the best tech stocks, they think of the biggest names in the sector. That makes sense – those hefty market values are the result of strong performances.
One of investing's toughest tasks is market timing. In simple terms, market timing involves attempts to exit stocks, ETFs, or other securities upon signs of weakness and reenter when things are improving.