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Forget Iran War: Bet Big on Tech ETFs on Earnings Strength
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Key Takeaways
Tech sector drives earnings growth, with S&P 500 Q1 growth dropping from 11.3% to 5% ex-Tech.
Weak sentiment persists, yet MAGS is down while XLK has gained year to date.
Strong estimate revisions and profitability keep tech ETFs like VGT, SMH, IGV in focus.
As the 2025 fourth-quarter earnings season nears its end, corporate profitability remains robust and is showing clear signs of improvement. The Tech sector remains a bright spot in the earnings scorecard.
Tech Sector Drives Positive Revisions
Amid ongoing geopolitical risks and concerns over software demand and rising spending by the “Mag 7,” sentiment toward big tech has remained subdued. Year-to-date performance reflects this cautious outlook across the Mag 7 and the broader Tech sector. Roundhill Magnificent Seven ETF (MAGS - Free Report) has lost about 6.5% so far this year, while State Street Technology Select Sector SPDR ETF (XLK - Free Report) has advanced about 3.3% in the year-to-date frame.
Profitability Strength Anchored in Tech
Even with softer sentiment, the Mag 7 and broader Tech space continue to serve as the strongest profitability engines within the S&P 500. Their earnings outlook remains solid, thanks to consistent positive estimate revisions.
Tech’s Outsized Role in Earnings Growth
The Tech sector has been a major driver of overall earnings growth since the third quarter of 2023 and is expected to maintain that leadership in the first quarter of 2026, per the Zacks Earnings Trend.
S&P 500 earnings are projected to grow 11.3% year over year in Q1, but this growth rate drops sharply to 5% when the Tech sector is excluded, underscoring its importance.
Broader Sector Support Emerging
The Tech sector’s strong revisions trend has helped keep overall estimate revisions in positive territory, offsetting weakness in other areas. Alongside Tech, three other sectors — Finance, Industrial Products, and Business Services — have also seen upward revisions to their Q1 2026 earnings estimates since October 2025.
ETFs in Focus
Against this backdrop, below we highlight a few technology-based exchange-traded funds (ETFs) that can be tapped now.
The underlying MSCI US Investable Market Information Technology 25/50 Index is designed to transition in and out of securities affected by pending updates to the information technology sector. VGT charges 9 bps in fees and yields 0.42% annually. The fund is heavily weighted towardNVIDIA (17.47%), Apple (14.89%) and Microsoft (12.19%).
The underlying MVIS US Listed Semiconductor 25 Index tracks the overall performance of companies involved in semiconductor production and equipment. The fund charges 35 bps in fees. It is heavy on NVIDIA (18.44%), Taiwan Semiconductor (10.48%) and Broadcom (7.07%).
The underlying S&P North American Expanded Technology Software Index comprises North American equities in the software industry and select North American equities from the interactive home entertainment and interactive media and services industries. The fund charges 39 bps in fees. IGV is heavy on Microsoft (9.55%), Palantir (8.24%) and Salesforce (7.49%).
The underlying Nasdaq CTA Cybersecurity Index tracks the performance of companies engaged in the cybersecurity segment of the technology and industrials sectors. The fund charges 58 bps in fees. CIBR is heavy on Cisco (9.63%), Infosys (8.64%) and Palo Alto (7.32%).
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Forget Iran War: Bet Big on Tech ETFs on Earnings Strength
Key Takeaways
As the 2025 fourth-quarter earnings season nears its end, corporate profitability remains robust and is showing clear signs of improvement. The Tech sector remains a bright spot in the earnings scorecard.
Tech Sector Drives Positive Revisions
Amid ongoing geopolitical risks and concerns over software demand and rising spending by the “Mag 7,” sentiment toward big tech has remained subdued. Year-to-date performance reflects this cautious outlook across the Mag 7 and the broader Tech sector. Roundhill Magnificent Seven ETF (MAGS - Free Report) has lost about 6.5% so far this year, while State Street Technology Select Sector SPDR ETF (XLK - Free Report) has advanced about 3.3% in the year-to-date frame.
Profitability Strength Anchored in Tech
Even with softer sentiment, the Mag 7 and broader Tech space continue to serve as the strongest profitability engines within the S&P 500. Their earnings outlook remains solid, thanks to consistent positive estimate revisions.
Tech’s Outsized Role in Earnings Growth
The Tech sector has been a major driver of overall earnings growth since the third quarter of 2023 and is expected to maintain that leadership in the first quarter of 2026, per the Zacks Earnings Trend.
S&P 500 earnings are projected to grow 11.3% year over year in Q1, but this growth rate drops sharply to 5% when the Tech sector is excluded, underscoring its importance.
Broader Sector Support Emerging
The Tech sector’s strong revisions trend has helped keep overall estimate revisions in positive territory, offsetting weakness in other areas. Alongside Tech, three other sectors — Finance, Industrial Products, and Business Services — have also seen upward revisions to their Q1 2026 earnings estimates since October 2025.
ETFs in Focus
Against this backdrop, below we highlight a few technology-based exchange-traded funds (ETFs) that can be tapped now.
Vanguard Information Technology ETF (VGT - Free Report)
The underlying MSCI US Investable Market Information Technology 25/50 Index is designed to transition in and out of securities affected by pending updates to the information technology sector. VGT charges 9 bps in fees and yields 0.42% annually. The fund is heavily weighted towardNVIDIA (17.47%), Apple (14.89%) and Microsoft (12.19%).
VanEck Semiconductor ETF (SMH - Free Report)
The underlying MVIS US Listed Semiconductor 25 Index tracks the overall performance of companies involved in semiconductor production and equipment. The fund charges 35 bps in fees. It is heavy on NVIDIA (18.44%), Taiwan Semiconductor (10.48%) and Broadcom (7.07%).
iShares Expanded Tech-Software Sector ETF (IGV - Free Report)
The underlying S&P North American Expanded Technology Software Index comprises North American equities in the software industry and select North American equities from the interactive home entertainment and interactive media and services industries. The fund charges 39 bps in fees. IGV is heavy on Microsoft (9.55%), Palantir (8.24%) and Salesforce (7.49%).
First Trust NASDAQ Cybersecurity ETF (CIBR - Free Report)
The underlying Nasdaq CTA Cybersecurity Index tracks the performance of companies engaged in the cybersecurity segment of the technology and industrials sectors. The fund charges 58 bps in fees. CIBR is heavy on Cisco (9.63%), Infosys (8.64%) and Palo Alto (7.32%).