Invesco QQQ monthly review

Overview

• In January, QQQ returned 1.22% at NAV, underperforming the S&P 500 Index, which returned 1.45%. The Russell 1000 Growth Index returned -1.51%, underperforming QQQ, while the Russell 1000 Value Index returned 4.56%, outperforming QQQ.¹
• QQQ’s relative underperformance versus the S&P 500 was primarily driven by its differentiated holdings in the Consumer Discretionary sector and its average underweight to the Energy sector.
• QQQ saw net outflow of ~$358 million in January.
• QQQ ended the month with $412.15 billion in AUM and remained the 5th largest ETF in the US (based on AUM).
• For the month of January, shares traded of QQQ increased by 12.16% month-over-month and notional value² traded increased by 12.84% month-over-month.

Market Recap

QQQ underperformed the S&P 500 for the third consecutive month in January despite posting positive returns, rising 1.22% on an NAV total return basis versus the S&P 500’s gain of 1.45%. Equity markets continued to broaden beyond mega-cap growth stocks in January, instead favoring smaller size and value-oriented stocks, as the S&P 500 Equal Weight Index³ returned 3.39% and the Russell 1000 Value Index returned 4.56%. This was the third month in a row that the S&P 500 Equal Weight Index and the Russell 1000 Value Index outperformed both the S&P 500 and QQQ. This trend was punctuated by the Russell 1000 Growth Index, which fell 1.51%, marking its third month of negative returns. Equities were strong down the capitalization spectrum⁴, with the S&P MidCap 400 Index⁵, representing mid-cap equities, and the Russell 2000 Index⁶, representing small-cap equities, rising 4.05% and 5.35%, respectively. Despite the apparent trend away from mega-cap growth towards smaller-cap value, however, the Nasdaq-100 Index’s⁷ 1.23% increase in January broke a two-month-long streak of negative absolute returns and was a noticeable contrast to the Russell 1000 Growth Index’s -1.51% loss.

The increasingly established rotation from mega-cap growth equities to small- and mid-cap value equities was not the only major market story in January. Comments concerning Greenland made by President Trump ahead of the World Economic Forum in Davos renewed investor fears of an intensified, prolonged trade war between the United States and Europe, causing the VIX Index⁸, a measure of equity market volatility, to trade at an intraday high of 20.99 on January 20th, its highest level since November 25th. Although markets were subsequently calmed by clarifying comments from President Trump at Davos, the U.S. Dollar Index (DXY)⁹, which had been trending upward since the beginning of the year, began to fall before bottoming out at 96.217 on January 27th as investors pondered returning to the “Sell America” theme.

Precious metals gold and silver, which had begun the new year trading at $4,331.34/oz. and $71.66/oz., respectively, hit year-to-date intraday highs on January 29th of approximately $5,595.47/oz. and $121.65/oz. However, on January 30th, President Trump announced before market open that he would nominate Kevin Warsh, a member of the Federal Reserve Board of Governors¹⁰ from 2006 to 2011, to replace Jerome Powell as Chair of the Federal Reserve. The DXY Index⁹, which had already begun to reverse its downtrend, saw further strength on the day of the announcement, closing at 96.991, up from its opening level of 96.423. Precious metals fell precipitously during trading on January 30th, with gold and silver closing the month at $4,894.23/oz. and $85.20/oz., respectively.

While the January 28th Federal Reserve Open Market Committee’s (FOMC)¹¹ rate decision was mostly a non-event – the committee held rates steady, as market participants had expected, and there was no change in the total number of rate cuts (2) expected by market participants in 2026 – the equity market saw renewed volatility at the end of the month, with the VIX hitting an intraday high of 19.74 on the 29th. Comments and forward guidance from Microsoft and Meta Platforms about upcoming capital expenditures appeared to remind investors of the risks of technology overinvestment. Investors began to worry about a risk-off sentiment in mega-cap growth stocks, and the Nasdaq 100 posted a -0.53% return for the day, underperforming the S&P 500’s -0.13% loss.

The downturn in sentiment was not solely contained to the US. On January 19th, the recently elected prime minister of Japan, Sanae Takaichi, announced that a snap election would be held on February 8th and proposed a temporary suspension of the country’s 8% consumption tax on food. Yields on 10-Year Japanese Government Bonds (JGBs) spiked from 2.182% on January 18th to 2.351% on January 20th, their highest closing level since February 1999, as investors worried that the tax cuts could wreak fiscal havoc on the Japanese budget. These actions created significant volatility in the Japanese yen, which had weakened from 156.71 per U.S. dollar at the beginning of the year to 158.41 on January 22nd, before appreciating to 152.21 on the 27th and ending the month at 154.78. While the weakening of the yen in conjunction with the increase in JGB yields through January 20th may have reflected decreasing investor confidence in the Japanese economy, the relative appreciation of the yen versus the dollar from the 23rd to the 28th may have caused investors to worry that market participants could be forced to unwind the “carry trade” – borrowing in low-yielding Japanese yen and investing the proceeds in a higher-yielding currency, such as the US dollar – and sell assets quickly, driving up market volatility. These dynamics likely contributed to the late-month VIX spike as investors recalled a similar episode in late July and August 2024, when rapid yen appreciation forced an unwinding of the carry trade and the VIX saw its highest closing level that calendar year, at 38.57 on August 5th.

QQQ Performance

Seven of the ten sectors represented in QQQ finished January in positive territory. Energy was the best performing sector, returning 16.21%, followed by Basic Materials and Consumer Staples, which returned 7.45% and 5.17%, respectively. Real Estate was the worst performing sector, returning -8.54%, followed by Utilities and Consumer Discretionary, which returned -6.94% and -0.16%, respectively.

QQQ’s relative underperformance versus the S&P 500 was primarily driven by its differentiated holdings in the Consumer Discretionary and its average underweight to the Energy sector. QQQ’s Consumer Discretionary holdings returned -0.16% in January, while the S&P 500’s Consumer Discretionary holdings returned 1.54%. QQQ had an average underweight of 2.49% to the Energy sector in the month.

The Technology sector and QQQ’s 0% exposure to the Financials sector were the greatest contributors to the fund’s relative performance. QQQ’s differentiated Technology holdings returned 1.49% while the S&P 500’s Technology holdings returned only 0.11%. The S&P 500 Index maintained an average weight of 10.48% in Financials companies, which returned -1.18% in January. QQQ’s lack of exposure to these securities supported its relative performance.

Prior to market open on January 20, 2026, Walmart Inc. joined the Nasdaq 100 Index, replacing AstraZeneca Plc. Walmart, a Consumer Discretionary company, ended January as a top ten holding in QQQ, with a weight of 3.08% as of market close on January 31st. Although many may primarily view Walmart as simply a global discount consumer retailer, the company has been consistently investing in disruptive and innovative technologies to grow its existing business line and to streamline its operations. Walmart has engaged both OpenAI and Google Gemini for artificial intelligence (AI) partnerships that could help it be at the forefront of AI-agent-driven commerce. The company has also deployed its own proprietary AI shopping assistant, “Sparky”. These efforts have enabled Walmart to achieve an approximately 49% share of major consumer retailers’ AI-driven traffic as of November 25, 2025, per TD Cowen. On the supply side, Walmart has been deploying artificial intelligence tools to further optimize its complex global supply chain, reducing costs and driving margin growth. In a November 2026 earnings call, Walmart management remarked that “in Walmart US, more than 60% of [Walmart] stores are now receiving some freight from automated distribution centers, and more than 50% of [company] eCommerce fulfillment center volume is now automated, which is driving better unit productivity and helping to lower the cost to serve.” Overall, Walmart may be well positioned to benefit from AI implementation and has already begun to reap rewards from its automation efforts, making it an appropriate inclusion in an innovation-focused portfolio.

Announcements for calendar 4Q2025 earnings began in January, with 24 QQQ companies announcing results. Of those 24 companies, 18 beat analysts’ expectations, two had results in line with expectations, and four missed expectations.

Microsoft, reporting after market close on January 28th, noted that growth in its Azure cloud segment was slowing and that the company would continue to invest heavily in artificial intelligence (AI) infrastructure. These comments reignited investor concerns that the steep cost of AI development and implementation may outstrip the technology’s ability to generate near-term profits. These concerns were further underscored by Meta Platforms’ announcement during its own January 28th earnings report that it planned to spend $115-135 billion on capital expenditures in Fiscal Year 26 – up significantly from $72.22 billion in Fiscal Year 25. Investor reactions to announcements of high capex were not universal, however: although Microsoft and Meta both beat analyst expectations, Microsoft fell 10.66% while Meta rose 7.14% from their closing levels on the 28th through the end of the month.

Other major QQQ holdings reporting earnings in January included Tesla and Apple, both of which beat analyst earnings expectations. Tesla announced that it would discontinue production of its Model S and Model X vehicles, pivoting production capacity instead to its Optimus humanoid robot product line. The company also announced a $2 billion investment in xAI’s series E funding round, indicating a significant commitment to developing and integrating AI solutions in its products. Apple achieved 16% year-over-year sales growth across its products and segments, with 23% growth in iPhone sales and 14% in its services segment. Geographically, Apple saw 38% year-over-year revenue growth in its Greater China segment. Management assuaged investor concerns that high memory prices could suppress gross margins and reiterated its commitment to deploying AI in its product lineup, noting that the company planned to deploy a version of Siri powered by Google’s AI capabilities in 2026.

Standardized performance - Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and Shares, when redeemed, may be worth more or less than their original cost. See invesco.com to find the most recent month-end performance numbers. Market returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times. Fund performance reflects applicable fee waivers, absent which, performance data quoted would have been lower. Returns less than one year are cumulative. Invesco QQQ’s total expense ratio is 0.18%.

Trading Stats

For the month of January, shares traded of QQQ increased by 12.16% and notional value traded based on market price increased by 12.84% month-over-month. The month saw an average of 54.26 million shares traded each day (vs. 48.38 million last month) for an average daily value of $33.74 billion (vs. $29.90 billion last month). That compares to averages of 65.12 million shares and $7.25 billion over the life of the fund, and 50.30 million shares and $28.04 billion for the past 12 months.