It’s been a turbulent first quarter for semiconductor stocks. Industry behemoth Nvidia (NVDA) shed more than 10% since the start of the year. And investors have had to deal with the DeepSeek news out of China, among other challenges. For now, it appears there’s a tale of two outlooks emerging for chip stocks. That includes those residing in the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ).
On one hand, should expectations that the U.S. economy is poised to slow prove accurate, that would likely weigh on chip stocks. That is undoubtedly a cyclical group.
Conversely, many analysts remain bullish on the artificial intelligence (AI) opportunity set. And that is heavily reliant on the chips produced by an array of QQQ/QQQM member firms. Both scenarios could easily come to pass. And that could potentially underscore the risks in stock-picking and the benefits of accessing semiconductor stocks by way of ETFs such as QQQ and QQQM.
Chip Stock Tug-of-War
Macroeconomic lethargy would likely weigh on semiconductor stocks. Yet economists believe that even if a recession occurs, it’d likely be mild and it could evaporate quickly. That’s relevant when assessing chip stocks. So is the point that there are no guarantees an economic contraction happens.
Additionally, analysts remain bullish on the semiconductor/AI intersection, which is relevant in discussing QQQ and QQQM. That’s because the ETFs allocate nearly 12% of their weights to Nvidia and Broadcom (AVGO) — the leaders in AI chips.
“We’re tremendously optimistic about Nvidia’s growth. We have started to see some risk and some caution factored into Nvidia shares, which we didn’t see much of for most of the past two years. While 2025 spending might be great, 2026 is becoming a bit fuzzy,” noted Morningstar strategist Brian Colello. “While Nvidia has reported earnings the past two quarters that beat their guidance and consensus, and they guide the next quarter’s revenue above consensus, they’re not doing so at an accelerating pace. The beats are not nearly as large as they were at the dawn of the AI era.”
Colello added that Broadcom is positioned to be the other big winner in the AI semiconductor. That’s because it is producing bespoke chips for a variety of clients, including some that are QQQ/QQQM holdings. That gets into the AI spending conversation, which for now, doesn’t appear to be altered for the worse.
“We still haven’t seen signs that the hyperscalers are cutting capex. We haven’t seen too many CEOs say they’re going to scale back AI spending or investment,” added Colello. “There’s very much a race, and there are rewards for the company that can get the biggest, best, fastest model integrated most seamlessly into their existing products.”
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