Of course, earnings reports and forward-looking guidance are always important, but some market observers believe that artificial intelligence (AI) spending plans by hyperscalers, nearly all of which reside in the two Invesco ETFs, could be a significant driver of these funds’ near-term performances. There’s credibility in that thesis because corporate AI expenditures, including those by QQQ/QQQM member firms, are subject to increasing scrutiny by analysts and shareholders.
Among QQQ/QQQM holdings to keep an eye on the hyperscaler spending front is Facebook parent Meta (META).
“I think Meta, at least in my mind, is much more of a bet on artificial intelligence. And their capex spending, really, is to build out the AI part of their businesses,” says Dave Sekera of Morningstar. “As far as earnings for this past quarter, I don’t know of any reason why they shouldn’t meet or beat expectations. And I don’t think the market really cares that much about their earnings for this individual quarter, in and of itself. I think the focus for all of the hyperscalers is going to be on their capital expenditure projections.”
More QQQ Hyperscalers to Monitor
Meta isn’t the only QQQ/QQQM hyperscaler the investment community will be paying attention as it relates to AI spending. Google parent Alphabet (GOOGL) and Amazon (AMZN) fit that bill, too. That’s relevant to investors engaged with QQQ or QQQM because the ETFs allocate about 12% of their rosters to Amazon and the two share classes of Alphabet.
“For Alphabet GOOGL and Amazon.com AMZN. Again, big increases, especially at Amazon.com, looking for that to go from $74 billion up to $134 billion in spending on capex, taking their budget up to 17% of sales, up from 10%. And I think there’s still a lot of upside, even to some of our own projections here. I think the consensus for Meta, for example, is $95 billion for 2026,” adds Sekera.
Alphabet has been one of the best-performing mega-cap stocks over the past year, with Gemini AI advances paving the way for the company to enter the $4 trillion market capitalization club. The company can defray some AI-related risk through “other bets,” such as Waymo and YouTube growth, as well as through its reputation as a prodigious generator of free cash flow.
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