Invesco QQQ monthly review

Overview

• For the month of February, QQQ’s NAV returned -2.70% underperforming the S&P 500 Index which returned -1.30%. The Russell 1000 Growth Index underperformed QQQ which returned -3.59% while the Russell 1000 Value Index outperformed which returned 0.41%.
• QQQ’s underperformance vs. the S&P 500 was driven by its differentiated holdings and overweight exposure in the Technology sector. Differentiated holdings and overweight exposure to the Consumer Discretionary sector was the second largest detractor to relative performance.
• QQQ saw inflow of $3.87 billion.
• QQQ ended the month with $321.46 billion in AUM and remained the 5th largest ETF in the US (based on AUM).
• For the month of February, shares traded of QQQ fell by 9.02% month-over-month along with notional value traded falling by 8.31% month-over-month.¹

Market Recap

The month of February presented opportunities for both bullish and bearish investors as the S&P 500® Index set a new all-time high on February 19^th before pulling back to levels seen at the beginning of January. The major index ultimately finished in the middle of its range seen so far in 2025 at 5954. The S&P 500 ended 2024 at 5881 so performance was still positive by 1.44% year-to-date. Concerns around tariffs, rising inflation and earnings growth contributed to the elevated volatility.

Volatility saw a spike at the beginning of the month as shown by the VIX spiking over 20 during the first trading day of February.² The following two weeks saw the VIX fall beneath 15.00 before rising again and finishing the month at 19.63. The reading above 19 was 26% higher than the average reading for 2024 which was 15.55. The wider monthly range on the VIX illustrated that many investors may have had doubts concerning the strength of current market conditions.

The increased volatility was also illustrated through the daily trading ranges seen between the high and low price of the S&P 500. The average daily range for the S&P 500 during the month of February was 57 points, with the largest daily range being 134 points. For context, the range for February 2024 was 37 points. The larger daily ranges of February 2025 displayed the uncertainty that many investors had during the month.

Driving much of that uncertainty were discussions around the upcoming implementation of tariffs by the new Trump administration. On February 1^st, the new administration announced tariffs against some of the largest trade partners of the United States: Canada, Mexico and China. The rate of the tariffs varied by country, and in some cases by the type of good. Canadian non-energy goods would be taxed at a rate of 25% while energy at a rate of 10%. The rate for all goods from Mexico would be taxed at a rate of 25% while goods from China would initially be taxed at 10% before eventually increasing to 20%. These tariffs were initially slated to go effective on February 4^th. With the announcement occurring on a weekend, many investors had to wait until Monday, February 3^rd to take action in the stock market. The news was interpreted as negative with the S&P 500 finishing the day down 0.75% and QQQ’s NAV down 0.84% on the 3^rd.

However, a later announcement from the Trump administration stated that the implementation of these tariffs would be delayed until March 4^th. Equities rose off this news as the S&P 500 rose 1.12% and QQQ 1.69% (NAV) during February 4^th and 5^th. The tariff excitement did not stop there. Tariffs were announced on all incoming steel, aluminum, automobiles and motor vehicle parts. In response to the tariffs levied by the U.S., Canada and China announced retaliatory tariffs on U.S. goods. Additionally, tariffs were announced on goods from the European Union at a rate of 25% on February 26th.

The concerns of tariffs started to affect forecast of future growth. The Federal Reserve’s branch in Atlanta forecasts future GDP growth through the GDPNow Forecast. The central bank lowered their annualized Q1 forecast for U.S. GDP from 2.3% to -1.5%. This indicated that they believed with the data they had, GDP has the potential to contract for the first quarter. If this takes place, it would be the first negative reading since Q1 of 2022. Tariffs were not the only detractor to their estimate. Other detractors were consumer spending due to inclement weather in January, along with lower levels of exports.

The Federal Open Market Committee’s (FOMC) preferred inflation measure, US Personal Consumption Expenditures (PCE), was reported on February 28th.³,⁴ Year-over-year PCE came in at 2.5%, in line with the expectation while being lower than the prior reading of 2.6%. A rise in the cost of Services accounted for most of the reading with non-durable goods also contributing. Costs in Durable Goods fell. Month-over-month PCE rose at a rate of 0.3% in line with the estimate and the same level as the previous reading. The 0.3% equated to an annualized rate of 3.6%, higher than the FOMC’s 2% target. The month-over-month reading saw costs in all four components increase and led some investors to raise concerns of higher inflation returning.

After interest rates finished January relatively flat, February ushered in a new trend of falling rates. The U.S. 10yr Treasury peaked at 4.6% before finishing the month at 4.20%. The falling yields coincided with weakness in equities. This relationship of yields falling and equities falling has traditionally coincided with investors selling stocks and buying bonds. This caused rates to fall as many investors moved to the less risky asset class of fixed income.

QQQ Performance

From a sector perspective during February, Telecommunications, Health Care and Consumer Staples were the best performing sectors in QQQ and returned 9.96%, 5.65% and 5.47%, respectively. During the month, these three sectors had average weights of 4.53%, 5.37% and 2.78%, respectively. The bottom performing sectors in QQQ were Consumer Discretionary, Industrials and Technology which had average weights of 20.23%, 4.48% and 58.74%, respectively. Consumer Discretionary returned -6.90%, Industrials returned -3.68% while Technology returned -3.40%.

Standardized performance - Performance quoted is past performance and cannot guarantee of comparable future results; current performance may be higher or lower. Visit invesco.com/performance for the most recent month-end performance. Investment returns and principal value will vary; you may have a gain or loss when you sell shares. Fund performance reflects fee waivers, absent which, performance data quoted would have been lower. Invesco QQQ’s total expense ratio is 0.20%. Index performance does not represent fund performance. Please keep in mind that high, double-digit and/or triple-digit returns are highly unusual and cannot be sustained.

QQQ’s underperformance vs. the S&P 500 was driven by its differentiated holdings and overweight exposure in the Technology sector. Differentiated holdings and overweight exposure to the Consumer Discretionary sector was the second largest detractor to relative performance. The ETF’s lack of exposure to the Financials sector also detracted from relative performance.

Differentiated holdings and overweight exposure in the Telecommunications sector was the top contributor to relative performance vs. the S&P 500. Health Care also contributed because of its differentiated holdings. The third and final contributor was Basic Materials due to its overweight exposure and differentiated holdings.

QQQ’s overweight exposure to T-Mobile, Costco Wholesale and Gilead Sciences were the largest contributors to relative performance vs. the S&P 500. T-Mobile, Costco Wholesale and Gilead Sciences had average weights during the month of 1.84%, 2.85% and 0.80%, and returned 16.14%, 7.13% and 17.60%, respectively. Overweight exposure to Tesla, Broadcom and Amazon.com detracted the most from relative performance vs. the S&P 500 for the month and had average weights of 3.18%, 4.34% and 5.99%, respectively Tesla, Broadcom and Amazon.com returned -27.59%, -9.87% and -10.69%, respectively.

After setting a news all time high price of $539.37 on February 18^th, QQQ proceeded to pullback the remainder of the month and finished $508.17 per share. This equated to a -5.78% return over the last eight trading sessions of the month. Many investors will be watching $485 per share as that would signal a 10% pullback in the ETF. Despite the negative performance, QQQ still saw positive inflow to the tune of $3.8 billion for February. In the upcoming months, many investors will be watching to see if QQQ remains in its current range of $485 - $540 or if it makes a move out.

Intel was the best performing stock in QQQ for the month of February rising over 22%. The strong performance of the semiconductor company was fueled by remarks by Vice President Vance at the Paris Artificial Intelligence (AI) Summit. Vance stated, “To safeguard America’s advantage, the Trump administration will ensure that the most powerful AI systems are built in the U.S. with American designed and manufactured chips.” Intel’s stock rose over 10% on February 11^th after the V.P.’s comments were made. The chipmaker has struggled over the past 12 months with its stock dropping 42% since February 2024. Intel has faced fierce competition from Nvidia and Broadcom, with many investors feeling that Intel has fallen behind in artificial intelligence development.

Nvida announced earnings on February 26^th and beat estimates on both the top and bottom line. Revenue was announced at $39.33 billion the estimate of $38.24 billion while adjusted earnings-per-share came in at $0.89 vs. the estimate of $0.84.⁵ The options market was estimating around a 9% move, up or down, in the company’s stock after the announcement. However, the stock did not fluctuate to that extent in afterhours trading. The stock closed the regular session at $130.98 a share and ranged between $125.54 and $136.60 before settling at $129.30. However, the following day, February 27^th, Nvidia led the market down and fell over 8.48%. Many investors raised concerns over shrinking gross margin. Gross margin fell 4% for the most recent quarter. Nvidia issued guidance for the next quarter showing that gross margin may fall up to 9%. The company also estimated that next quarter’s revenue would be $43 billion, plus or minus 2%. While the revenue growth expectation was still higher, the pace at which it was expected to grow was at a slower pace than previous quarter’s. Nvidia’s stock finished the month up 4.04%.

Trading Stats

For the month of February, shares traded of QQQ fell by 9.02% month-over-month along with notional value traded falling by 8.31% month-over-month. The month saw an average of 30.80 million shares trade each day (vs. 33.86 million last month) for a value of $16.08 billion (vs. $ 17.54 billion last month). That compares to averages of 65.59 million shares and $6.47 billion over the life of the fund, and 35.10 million shares and $16.68 billion for the past 12 months.