"In most years (especially up years), the Nasdaq 100 stood that much taller than the S&P 500, thanks in part to beefier gains from the tech sector. Invesco's Q3 note shows QQQ NAV +8.94% in Q3 2025, ahead of the S&P 500's +8.12%. But just because the Nasdaq 100 tends to outrun the market on the way up doesn't mean it'll do so moving forward, especially if tech goes from boom to bust suddenly."
"Indeed, there's likely a heck of a lot more artificial intelligence (AI) hype priced into the tech-heavy QQQ relative to the S&P 500 or the broader total market index funds out there. And while a higher multiple on your average holding could be worth paying if mega-cap tech's hefty AI-related capex accompanies a solid return to investment in the near future, investors shouldn't forget they also stand to profit from the AI revolution from broader market exposure."
QQQ delivered stronger recent quarterly performance, with QQQ NAV up 8.94% in Q3 2025 versus the S&P 500's 8.12%. QQQ carries markedly higher tech weighting and appears roughly 30% pricier, with a P/E near 34.6. Significant AI-related hype and higher multiples are embedded in QQQ holdings, increasing sensitivity to tech cycles. Broader-market funds and many non-tech firms are adopting AI and may lack an AI premium, creating room for multiple expansion if AI investments produce returns. A proposed fee cut for QQQ is pending clarification, and investors face trade-offs between concentrated tech upside and diversified exposure.
Read at 24/7 Wall St.
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