Back to top

Image: Bigstock

5 Technology Stocks Powering the S&P 500 ETF This Year

Read MoreHide Full Article

The S&P 500 Index reached another record high in the wake of Nvidia Corp.’s (NVDA - Free Report) blockbuster earnings, which spread bullishness across the globe. SPDR S&P 500 ETF Trust (SPY - Free Report) , the proxy version of the S&P 500 Index, has risen 4.6% so far this year. Strong corporate earnings and the AI boom have been the major drivers of the surge this year.

Here, we have highlighted five technology stocks that have gained in double digits so far this year, and have a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold). These are Nvidia (NVDA - Free Report) , Meta Platforms (META - Free Report) , Uber Technologies, Inc. (UBER - Free Report) , Advanced Micro Devices (AMD - Free Report) and Applied Materials (AMAT - Free Report) .

Total fourth-quarter earnings of the 402 S&P 500 members who have reported results so far increased 4.9% from the prior-year period on 3.4% higher revenues. Of the companies that reported results, 78.6% beat EPS estimates and 64.4% surpassed revenue estimates. The pace of earnings and revenue growth represents an acceleration from the last couple of quarters, with the technology sector being a major contributor to this improving trend. Notably, earnings growth is the best growth rate for the S&P 500 companies since the 6.2% earnings growth rate in the second quarter of 2022.

In the latest earnings announcement, Nvidia reported a staggering 265% increase in revenues and provided an optimistic outlook, indicating a surge in demand for AI hardware. This not only showcased Nvidia's robust position in the AI chip market but also signaled promising prospects for the semiconductor industry in 2025 and beyond. As such, the stock jumped about 16% to an all-time high and added $277 billion to its market cap — the biggest one-day boost ever recorded (read: Nvidia ETFs to Tap for More Growth Post Blowout Q4 Earnings).

Additionally, the bouts of data indicate a resilient economy, leading to risk-on trade. Factors like robust retail sales, consumer sentiment and a cooling trend in the producer price index indicate the possibility of the Fed achieving a soft landing, bringing inflation back to target without triggering a recession. According to the latest American Association of Individual Investors (AAII) Sentiment Survey, bullish sentiment rose to 44.3% for the week ending Feb 21, more than the 42.2% in the previous reading, and above the historical average of 37.5% for the 16th straight week.

Let’s take a closer look at the fundamentals of SPY.

SPY in Focus

SPDR S&P 500 ETF Trust holds 503 stocks in its basket, with each accounting for no more than 7.2% of the assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, financials, healthcare and consumer discretionary accounting for a double-digit allocation each. SPDR S&P 500 ETF Trust has an AUM of $488.5 billion and charges 9 bps in fees per year. It trades in average daily volume of 66 million shares and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see: all the Large Cap Blend ETFs here).

Below we have highlighted the abovementioned five best-performing tech stocks in the ETF.

Best-Performing Tech Stocks of SPY

Nvidia is the worldwide leader in visual computing technologies and the inventor of graphic processing unit or GPU. The stock has jumped 58.6% this year. It has an estimated growth of 50.8% for the fiscal year ending January 2025.

Nvidia makes up for 4.5% of the assets in SPY and has a Zacks Rank #1 at present. It has a Growth Score of B.

Meta Platforms is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like the photo and video sharing app Instagram and WhatsApp messaging app due to acquisitions. The stock jumped 37% this year and has an estimated earnings growth of 32.2% for this year.

Meta Platforms makes up for 2.5% of the assets in SPY and currently has a Zacks Rank #1 (Buy). It has a Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Uber Technologies develops and operates proprietary technology applications in the United States, Canada, Latin America, Europe, the Middle East, Africa, and Asia, excluding China and Southeast Asia. The stock has gained 26.7% and accounts for a 0.4% share in the SPY portfolio.

Uber Technologies has an estimated earnings growth rate of 33.3% for this year. It has a Zacks Rank #2 and a Growth Score of A.

Advanced Micro Devices has strengthened its position in the semiconductor market on the back of its evolution from a pure-bred consumer-PC chip provider to an enterprise-focused company. The stock has rallied 23.4% so far this year and makes up for 0.6% in the SPY portfolio.

Advanced Micro Devices has an estimated earnings growth rate of 30.6% for this year and has a Zacks Rank #3 (read: Nvidia Drives AI and Semiconductor Stocks: ETFs to Gain).

Applied Materials is one of the world’s largest suppliers of equipment for the fabrication of semiconductor, flat panel liquid crystal displays and solar photovoltaic cells and modules. The stock has gained about 23% this year and makes up for 0.4% of the SPY portfolio.

Applied Materials saw a solid earnings estimate revision of 41 cents over the past 30 days for the fiscal year ending October 2024. It has a Zacks Rank #2 and a solid Growth Score of A.

Published in