Last week saw better-than-expected quarterly earnings reported by semiconductor maker Nvidia (NVDA). But there’s still plenty of earnings potency to be found with mega-cap technology stocks.
That could augur well for ETFs such as the Invesco Top QQQ ETF (QBIG). That actively managed fund comprises Magnificent Seven stocks along with Nvidia’s rival Broadcom (AVGO). QBIG components, particularly those with intimate AI, have dealt with some headwinds this year. That’s because of U.S./China trade tensions and the purported advancements by China’s DeepSeek AI platform.
On the other hand, data indicates Magnificent Seven earnings growth continues outpacing that of the S&P 500 by wide margins. With just a month left in the second quarter, the earnings firepower of that acohort and other AI names could soon be in the spotlight. That would potentially bring opportunity for investors. Some of that upside may already be priced in, as highlighted by QBIG’s 13.33% May rally.
QBIG Could Be Short-, Long-Term Winner
Earnings reports could make for relevant near-term catalysts for QBIG and its components. But the AI investment thesis is longer-ranging, meaning patient investors could be rewarded. They may also be rewarded by embracing broader approaches such as QBIG. Elevated levels of AI spending potentially highlight QBIG’s perks.
“Big-tech capital expenditure on AI investment showed no signs of slowing down in Q1. Some of the hyperscalers, such as Meta and Amazon, announced that capex was accelerating, while Microsoft and Google reiterated forecasts,” according to BlackRock. “We estimate the total for all hyperscalers for 2025 will be more than $370 billion, up from $230 billion in 2024, while operating cash flows stand at $739 billion.”
The asset manager also points out a pivotal factor: AI hyperscalers are starting to see return on investment. That confirms some previous AI spending has panned out. But it also could also imply future related expenditures are valid and may not make shareholders skittish. That could be good news for AI enablers, including QBIG holdings Broadcom and Nvidia.
Adding to the pertinence of QBIG as an AI play is the sheer depth at which this disruptive technology touches the industry. In other words, the field of adopters is broad, and that could support the long-term investment thesis.
“This investment is likely to flow through all areas of the AI technology stack, from data centers and power generation up to software and applications. Our tech team expects software companies to benefit as the technology becomes more readily available,” concluded BlackRock.
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