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Tech ETFs Hit New Highs as NVIDIA Powers Market Rally
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The technology sector has been driving the stock market rally once again, pushing the Nasdaq Composite Index to an all-time high. The latest catalyst is NVIDIA (NVDIA), which soared to become the first publicly traded company valued at $4 trillion. This reflects the massive importance of the AI chipmaker and its presence in the technology sector.
A stronger-than-expected U.S. labor data highlights the economy’s resilience. Easing U.S.-China trade tensions further supported gains, setting the stage for potential upside as the Q2 earnings season approaches.
Given this, many tech ETFs are soaring. We have highlighted five popular options in the space that have made new all-time highs in the latest trading session. These are Technology Select Sector SPDR Fund (XLK - Free Report) , Vanguard Information Technology ETF (VGT - Free Report) , VanEck Vectors Semiconductor ETF (SMH - Free Report) , iShares US Technology ETF (IYW - Free Report) and ARK Innovation ETF (ARKK - Free Report) (see: all the Technology ETFs here).
Here are the key factors driving tech ETFs higher:
NVIDIA’s Milestone and Other Mag 7
NVDA became the first company to reach a $4 trillion market cap on July 9, driving a sharp rally in the technology sector. Other “Magnificent Seven” stocks, Microsoft (MSFT), Apple (AAPL), Alphabet (GOOGL), Meta Platforms (META) and Amazon (AMZN), also rallied. Microsoft's market value is hovering around $3.7 trillion, while Apple ranks third at about $3.1 trillion (read: Mag 7 ETFs Surge: Will the Rally Keep Rolling?).
The gains came despite Trump reigniting global trade tensions by threatening new tariff rates, ranging from 25% to 40% on more than a dozen countries starting Aug. 1. The United States will impose 25% tariffs on goods from South Korea and Japan from Aug. 1, while also imposing steep import duties on other nations by next month. Trump also warned that BRICS countries could be hit with an extra 10% tariff, accusing the group of trying to harm the United States and weaken the U.S. dollar.
AI Momentum
The AI boom will continue to fuel the rally, with companies investing huge sums in the technology sector and beyond. The expansion of AI applications holds the promise of ushering in fresh growth opportunities. Tech companies have poured billions into data centers and AI chips to support the growth of AI models.
Fed Rate Cut Hopes
Fed’s June meeting minutes hinted at the possibility of interest rate cuts in 2025 and 2026, improving investor sentiment.
Resilient Earnings & Easing Tariffs
The technology sector is among the major growth drivers for the second-quarter earnings season. The sector is expected to post 11.8% earnings growth in Q2 on 10.8% higher revenues, per the the Earnings Trends report.
Even though new tariffs were on the table, software and cloud firms were seen as “safer” due to less physical supply???chain exposure.
Promising Outlook
The global digital shift has accelerated e-commerce across various sectors, including remote working, entertainment, and shopping, thereby strengthening the sector. The rapid adoption of cloud computing, big data, the Internet of Things, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain and 5G technology will continue to fuel a rally.
If these were not enough, the technology sector has a solid Zacks Sector Rank, being in the top 32%.
Select Sector SPDR Technology ETF is the most popular and liquid ETF in the technology space, with AUM of $81 billion and an average daily volume of 6 million shares. It offers broad exposure to the technology sector and follows the Technology Select Sector Index. Select Sector SPDR Technology ETF holds about 68 securities in its basket and charges 8 bps in fees per year from investors. It has a Zacks ETF Rank #1 (Strong Buy).
Vanguard Information Technology ETF manages $95 billion in its asset base and provides exposure to 319 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Vanguard Information Technology ETF has an expense ratio of 0.09%, whereas volume is solid at nearly 501,000 shares. It has a Zacks ETF Rank #1.
VanEck Vectors Semiconductor ETF offers exposure to 26 companies involved in semiconductor production and equipment. It follows the MVIS US Listed Semiconductor 25 Index, which tracks the most liquid companies in the industry based on market capitalization and trading volume. VanEck Vectors Semiconductor ETF has managed assets worth $26.9 billion and charges 35 bps in annual fees and expenses. It trades in an average daily volume of 9 million shares and flaunts a Zacks ETF Rank #1 (read: NVIDIA Shares Hit New Record High: ETFs in Focus).
iShares Dow Jones US Technology ETF tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, giving investors exposure to 141 U.S. electronics, computer software and hardware, and informational technology companies. It has an AUM of $21.8 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges 763,000 shares a day. It has a Zacks ETF Rank #1.
ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of products or services, technological improvements, and advancements in scientific research related to the areas of DNA technologies and genomic revolution, automation, robotics, energy storage, artificial intelligence, next-generation Internet and Fintech innovation. In total, the fund holds 41 securities in its basket. ARK Innovation ETF has gathered $6.8 billion in its asset base and charges 75 bps in fees per year from investors. It trades in an average daily volume of 12 million shares (read: Cathie Wood's ARKK ETF Turns Red Hot in June: Here's Why).
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Tech ETFs Hit New Highs as NVIDIA Powers Market Rally
The technology sector has been driving the stock market rally once again, pushing the Nasdaq Composite Index to an all-time high. The latest catalyst is NVIDIA (NVDIA), which soared to become the first publicly traded company valued at $4 trillion. This reflects the massive importance of the AI chipmaker and its presence in the technology sector.
A stronger-than-expected U.S. labor data highlights the economy’s resilience. Easing U.S.-China trade tensions further supported gains, setting the stage for potential upside as the Q2 earnings season approaches.
Given this, many tech ETFs are soaring. We have highlighted five popular options in the space that have made new all-time highs in the latest trading session. These are Technology Select Sector SPDR Fund (XLK - Free Report) , Vanguard Information Technology ETF (VGT - Free Report) , VanEck Vectors Semiconductor ETF (SMH - Free Report) , iShares US Technology ETF (IYW - Free Report) and ARK Innovation ETF (ARKK - Free Report) (see: all the Technology ETFs here).
Here are the key factors driving tech ETFs higher:
NVIDIA’s Milestone and Other Mag 7
NVDA became the first company to reach a $4 trillion market cap on July 9, driving a sharp rally in the technology sector. Other “Magnificent Seven” stocks, Microsoft (MSFT), Apple (AAPL), Alphabet (GOOGL), Meta Platforms (META) and Amazon (AMZN), also rallied. Microsoft's market value is hovering around $3.7 trillion, while Apple ranks third at about $3.1 trillion (read: Mag 7 ETFs Surge: Will the Rally Keep Rolling?).
The gains came despite Trump reigniting global trade tensions by threatening new tariff rates, ranging from 25% to 40% on more than a dozen countries starting Aug. 1. The United States will impose 25% tariffs on goods from South Korea and Japan from Aug. 1, while also imposing steep import duties on other nations by next month. Trump also warned that BRICS countries could be hit with an extra 10% tariff, accusing the group of trying to harm the United States and weaken the U.S. dollar.
AI Momentum
The AI boom will continue to fuel the rally, with companies investing huge sums in the technology sector and beyond. The expansion of AI applications holds the promise of ushering in fresh growth opportunities. Tech companies have poured billions into data centers and AI chips to support the growth of AI models.
Fed Rate Cut Hopes
Fed’s June meeting minutes hinted at the possibility of interest rate cuts in 2025 and 2026, improving investor sentiment.
Resilient Earnings & Easing Tariffs
The technology sector is among the major growth drivers for the second-quarter earnings season. The sector is expected to post 11.8% earnings growth in Q2 on 10.8% higher revenues, per the the Earnings Trends report.
Even though new tariffs were on the table, software and cloud firms were seen as “safer” due to less physical supply???chain exposure.
Promising Outlook
The global digital shift has accelerated e-commerce across various sectors, including remote working, entertainment, and shopping, thereby strengthening the sector. The rapid adoption of cloud computing, big data, the Internet of Things, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain and 5G technology will continue to fuel a rally.
If these were not enough, the technology sector has a solid Zacks Sector Rank, being in the top 32%.
ETFs in Focus
Select Sector SPDR Technology ETF (XLK - Free Report)
Select Sector SPDR Technology ETF is the most popular and liquid ETF in the technology space, with AUM of $81 billion and an average daily volume of 6 million shares. It offers broad exposure to the technology sector and follows the Technology Select Sector Index. Select Sector SPDR Technology ETF holds about 68 securities in its basket and charges 8 bps in fees per year from investors. It has a Zacks ETF Rank #1 (Strong Buy).
Vanguard Information Technology ETF (VGT - Free Report)
Vanguard Information Technology ETF manages $95 billion in its asset base and provides exposure to 319 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Vanguard Information Technology ETF has an expense ratio of 0.09%, whereas volume is solid at nearly 501,000 shares. It has a Zacks ETF Rank #1.
VanEck Vectors Semiconductor ETF (SMH - Free Report)
VanEck Vectors Semiconductor ETF offers exposure to 26 companies involved in semiconductor production and equipment. It follows the MVIS US Listed Semiconductor 25 Index, which tracks the most liquid companies in the industry based on market capitalization and trading volume. VanEck Vectors Semiconductor ETF has managed assets worth $26.9 billion and charges 35 bps in annual fees and expenses. It trades in an average daily volume of 9 million shares and flaunts a Zacks ETF Rank #1 (read: NVIDIA Shares Hit New Record High: ETFs in Focus).
iShares US Technology ETF (IYW - Free Report)
iShares Dow Jones US Technology ETF tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, giving investors exposure to 141 U.S. electronics, computer software and hardware, and informational technology companies. It has an AUM of $21.8 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges 763,000 shares a day. It has a Zacks ETF Rank #1.
ARK Innovation ETF (ARKK - Free Report)
ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of products or services, technological improvements, and advancements in scientific research related to the areas of DNA technologies and genomic revolution, automation, robotics, energy storage, artificial intelligence, next-generation Internet and Fintech innovation. In total, the fund holds 41 securities in its basket. ARK Innovation ETF has gathered $6.8 billion in its asset base and charges 75 bps in fees per year from investors. It trades in an average daily volume of 12 million shares (read: Cathie Wood's ARKK ETF Turns Red Hot in June: Here's Why).