Apple (AAPL) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.
TSMC, the world's largest contract chipmaker, will invest up to $100 million in chip designer Arm Holdings Plc's initial public share offering (IPO), it said on Tuesday.
Tesla topped a list of the most shorted large-cap U.S. stocks for a third consecutive month in August, securities lending data firm Hazeltree said in a report on Tuesday.
Wall Street's main indexes were poised to open lower on Tuesday after starting the week on a strong footing, as investors awaited key inflation readings for clues on the Federal Reserve's interest-rate path.
Shares of Apple (NASDAQ: AAPL) have taken a big hit in recent weeks, pulling back about 9% since Aug. 1. The decline is likely due to a combination of factors, including shares taking a breather after a huge run-up this year and concerns about China's move to ban iPhones at some
Wall Street delivered downbeat performances last week due to rising rates. The S&P 500 (down 1.3%), the Dow Jones (down 0.8%), the Nasdaq (down 1.9%) and the Russell 2000 (down 3.6%) – all slumped last week (read: A Guide to H
Today Apple (AAPL) will hold its annual event to introduce several new products, including its latest iPhone models and Arm Holdings (ARM) inches closer to its hot IPO offering.
The marquee product will certainly be the iPhone 15. Analysts and consumers broadly expect Apple to unveil four models which has been the company's pattern over the past several iterations.
Launched on 11/03/2009, the Schwab U.S. Large-Cap ETF (SCHX) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Blend segment of the US equity market.
The SPDR MSCI USA StrategicFactors ETF (QUS) was launched on 04/15/2015, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Blend segment of the US equity market.
Looking for broad exposure to the Large Cap Blend segment of the US equity market? You should consider the BNY Mellon US Large Cap Core Equity ETF (BKLC), a passively managed exchange traded fund launched on 04/09/2020.
Apple on Tuesday is expected to unveil a new iPhone 15 lineup as questions about market access in China and competition hang over the world's most valuable listed company.
The United States will argue on Tuesday that Google did not play by the rules in its efforts to dominate online search, as a trial seen as a battle for the soul of the internet gets underway before a federal judge in Washington.
The bigger they are, the more they attract each other. That's how gravity works in the physical world. It's why the moon revolves around the Earth and affects our ocean tides.
In today's video, I discuss recent updates impacting various semiconductor companies. Check out the short video to learn more, consider subscribing, and click the special offer link below.
British chip components maker IQE said on Tuesday it was focussed on penetrating Asian markets and growth opportunities from the artificial intelligence (AI) space as it forecast a slower-than-anticipated recovery in the chip industry this year.
Wall Street delivered downbeat performances last week due to rising rates. The S&P 500 (down 1.3%), the Dow Jones (down 0.8%), the Nasdaq (down 1.9%) and the Russell 2000 (down 3.6%) – all slumped last week (read: A Guide to H
GlobalFoundries, the world's third-largest contract chipmaker, opened a $4 billion semiconductor fabrication plant in Singapore on Tuesday, as part of a major global manufacturing expansion.
GlobalFoundries, one of the world's top five largest contract chipmakers, launched a $4 billion fabrication plant in Singapore on Tuesday, as part of a major global manufacturing expansion.
The Invesco QQQ Trust (
NASDAQ:QQQ)
and the
Technology Select Sector SPDR Fund (
NYSEARCA:XLK)
are two of the biggest and best-known technology ETFs out there. They’ve also been two of the market’s best ETFs to own over the past decade. With the tech sector surging in 2023, both have posted excellent total returns in 2023 so far, with QQQ up 40.8% and XLK up 41.3%. So, what’s the difference between these top tech ETFs, and is one better than the other?
What are QQQ and XLK’s Strategies?
While these are both tech-centric ETFs, their investment universes are somewhat different. QQQ invests in the Nasdaq 100 Index, the largest 100 non-financial stocks in the Nasdaq (
NDX
). Meanwhile, XLK invests in the technology sector of the S&P 500 (
SPX
).
Below, we’ll discuss how this plays out in each fund’s holdings.
Comparison of Portfolios
QQQ owns 101 stocks, and its top 10 holdings make up 48.4% of the index. Below, you’ll find an overview of
QQQ’s top 10 holdings using TipRanks’ holdings tool.
As you can see, QQQ gives investors exposure to the market’s top mega-cap tech stocks like Apple (
NASDAQ:AAPL
), Microsoft (
NASDAQ:MSFT
), Amazon (
NASDAQ:AMZN
), Nvidia (
NASDAQ:NVDA
), Meta Platforms (
NASDAQ:META
), Alphabet (
NASDAQ:GOOG
) (
NASDAQ:GOOGL
), and Tesla (
NASDAQ:TSLA
).
It’s also important to note that while the Nasdaq is a technology-heavy index, there are also plenty of non-technology companies that comprise the index, and several of these companies can be found just outside of QQQ’s top holdings.
For example, Costco (
NASDAQ:COST
) and Pepsi (
NASDAQ:PEP
) are the fund’s 11th- and 12th-largest holdings, with weightings of approximately 2% each. This isn’t a bad thing, as these stocks have been phenomenal performers for years, but investors should simply be aware that there are some non-tech stocks here, even though "the Q’s" have become synonymous with technology for many investors.
XLK is slightly different. It focuses specifically on the technology sector of the S&P 500, so there are no non-tech stocks within its holdings. It’s also a bit more concentrated than QQQ -- it owns 65 stocks, and its top 10 holdings make up 69.2% of the fund. Below, you’ll find an overview of
XLK’s top 10 holdings.
As you can see, XLK has large positions in some of the same mega-cap tech stocks that QQQ owns, like its massive positions in Microsoft and Apple, which each have weightings of around 22% in the fund. However, look closely, and you’ll notice that many of the other mega-cap tech stocks that QQQ owns aren’t present here in the top 10, or at all, because XLK doesn’t own them.
Why not? Because the S&P index categorizes these stocks differently and does not include them within the technology sector. For example, Amazon and Tesla are classified as consumer discretionary companies, and they make up the largest positions for the
Consumer Discretionary Select Sector SPDR Fund (
NYSEARCA:XLY)
. Meta Platforms and Alphabet are considered communications services and can be found in the
Communications Services Select Sector SPDR Fund (
NYSEARCA:XLC)
.
With these tech behemoths not included in XLK, the fund has room for other large-cap tech stocks in its top 10 holdings, such as Adobe (
NASDAQ:ADBE
), Salesforce (
NYSE:CRM
) and Oracle (
NYSE:ORCL
).
One approach isn’t necessarily better than the other, but QQQ probably gives investors a larger and more comprehensive range of exposure to what many investors think of as ‘technology stocks’ (even though it also includes some non-tech stocks like Pepsi and Costco). XLK has a more narrow definition of tech stocks. It doesn’t include any non-tech stocks, but it’s also missing some of the household names that investors think of when they think of tech stocks. Ultimately, this is the key difference between these two ETFs.
Both strategies yield portfolios with strong Smart Scores. The
Smart Score is a proprietary quantitative stock scoring system created by TipRanks. It gives stocks a score from 1 to 10 based on eight market key factors. A score of 8 or above is equivalent to an Outperform rating. Seven of QQQ’s top 10 holdings feature Smart Scores of 8 or above, while eight of XLK’s top 10 holdings score 8 or better. Nevertheless, QQQ and XLK both have ETF Smart Scores of 8 out of 10.
How Have QQQ and XLK Performed in the Long Term?
Both ETFs have posted dazzling returns over the long term. As discussed above, both ETFs have returned over 40% in 2023 (as of the end of August). Over the past three years, QQQ’s annualized total return has been 9.3%. It has returned 16.0% over the past five years on an annualized basis and 18.6% over the past 10 years on an annualized basis.
XLK has outperformed QQQ on a three-year basis, with a three-year annualized return of 13.4%. It has also beaten QQQ over the past five years, with an annualized return of 19.6%. Even over the past 10 years, it edges QQQ out with an excellent 20.5% annualized return.
Both ETFs have been top performers and have given their investors tremendous gains over the years, but XLK has outpaced QQQ over each of these time frames.
Expenses
These are both very reasonably-priced ETFs. QQQ sports an expense ratio of 0.20%, while XLK is even cheaper at 0.10%. This means that an individual putting $10,000 into QQQ would pay $20 in fees during their first year of investing in the fund, while an individual allocating $10,000 into XLK would pay just $10 in fees.
These are both favorable expense ratios for investors, but over the long run, the XLK investor would save a bit more money. Assuming that each fund returns 5% per year going forward and that the expense ratios stay where they are now, the QQQ investor would pay $255 in fees, while the XLK investor would pay $128 over the course of the decade.
Below, you’ll find a
comparison of QQQ and XLK using TipRanks' ETF Comparison Tool, which enables investors to compare up to 20 ETFs at a time on factors like fees, performance, and more.
Is QQQ Stock a Buy, According to Analysts?
Turning to Wall Street, QQQ earns a Moderate Buy consensus rating based on 84 Buys, 18 Holds, and no Sell ratings assigned in the past three months. The
average QQQ stock price target of $432.87 implies 14.8% upside potential.
Is XLK Stock a Buy, According to Analysts?
Turning to Wall Street, XLK earns a Moderate Buy consensus rating based on 53 Buys, 14 Holds, and no Sell ratings assigned in the past three months. The
average XLK stock price target of $197.70 implies 13.8% upside potential.
Investor Takeaway
These are both top tech ETFs. XLK has slightly outperformed QQQ over the past 10 years and also offers investors a lower expense ratio. Additionally, it offers an exclusive focus on technology stocks. However, I also like QQQ’s more all-encompassing group of technology holdings, which gives investors exposure to leading tech stocks like Meta Platforms, Amazon, and Alphabet, which aren’t found in XLK.
Both approaches have been fruitful over the years, and I find it hard to go wrong with either of these ETFs, and they both continue to look attractive over the long term.
Disclosure