5 ETFs Leading the Tech Rebound: Will the Rally Continue?

The technology sector, after being quiet for more than a month, gained momentum in the Apr 11 trading session, buoyed by a jump in big tech stocks. The ultra-popular Select Sector SPDR Technology ETF XLK was the clear outperformer, having gained 2% on the day.

The upside came on softer-than-expected producer prices data, which supported the belief that inflation is cooling. This reflects a strong reversal from the previous day, which shook the market over concerns of persistent inflation after consumer prices came in hotter than expected and diminished the prospect of interest rate cuts anytime soon.

ETFs in the tech space saw smooth trading yesterday. Some of the leading ETFs are MicroSectors FANG+ ETN FNGS, Invesco Semiconductors ETF PSI, Roundhill Magnificent Seven ETF MAGS, Invesco PHLX Semiconductor ETF SOXQ and Strive U.S. Semiconductor ETF SHOC.

In particular, "Magnificent Seven" registered strong gains, with Apple AAPL stealing the show with a 4.3% increase. The iPhone maker logged its best day since May 2023 after Bloomberg News reported that the company would transition its Mac product line to artificial intelligence-focused chips. Meanwhile, Amazon (AMZN) registered its first new all-time high in almost three years, rising 1.7% and edging closer to a market value of $2 trillion.

Nvidia Corp. NVDA, Alphabet Inc. GOOGL and Tesla Inc. TSLA gained 4.1%, 2.1%, and 1.7%, respectively, whereas Microsoft Inc. MSFT and Meta Platforms Inc. META rose about 1% each. Overall, the seven tech stocks added more than $300 billion in market cap on Thursday, per the analysis from Yahoo Finance's Jared Blikre (read: Can Dividend Kings Outperform the Magnificent 7 ETF?).

Promising Growth Outlook

Hopes of cutting interest rates later this year raise optimism. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for further initiatives when interest rates are low. The stocks are also riding on the frenzy around artificial intelligence (AI) technology. The expansion of AI applications holds the promise of ushering in fresh opportunities for growth within the sector.

Further, the sector outlook remains solid. The global digital shift has accelerated e-commerce for everything, ranging from remote working to entertainment and shopping, thereby bolstering strength in 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 weren’t enough, the technology sector has a solid Zacks Sector Rank, being in the top 38%, which suggests continued outperformance in the coming months.

Let’s dig into the details of the abovementioned ETFs:    

MicroSectors FANG+ ETN (FNGS) – Up 2.8%

MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is equal-dollar weighted and designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. The note accounts for a 10% share in each of the stocks. MicroSectors FANG+ ETN has accumulated $260.4 million in its asset base and charges 58 bps in annual fees. It trades in average daily volume of 181,000 shares and has a Zacks ETF Rank #3 (Hold) (read: Will 2024 Be a Year of 'Electric Eleven'? Tech ETFs to Gain).

Invesco Semiconductors ETF (PSI) – Up 2.6%

Invesco Semiconductors ETF tracks the Dynamic Semiconductor Intellidex Index, holding a well-diversified portfolio of 31 securities. It has AUM of $791.9 million and sees a moderate average daily volume of 71,000 shares. The expense ratio is 0.57%. PSI has a Zacks ETF Rank #1 (Strong Buy).

The Roundhill Magnificent Seven ETF (MAGS) – Up 2.5%

Roundhill Magnificent Seven ETF is the first-ever ETF that offers investors equal-weight exposure to the “Magnificent Seven” stocks. It has amassed $210.5 million in its asset base and charges 29 bps in fees per year. MAGS trades in an average daily volume of 206,000 shares.

Invesco PHLX Semiconductor ETF (SOXQ) – Up 2.4%

Invesco PHLX Semiconductor ETF offers exposure to the largest U.S.-listed securities of companies engaged in the semiconductor business. It tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket. SOXQ is concentrated on the top four firms, indicating some concentration issues.  

Invesco PHLX Semiconductor ETF has accumulated $365.1 million in its asset base. It charges 19 bps in annual fees and trades in an average daily volume of 237,000 shares. Invesco PHLX Semiconductor ETF has a Zacks ETF Rank #1 (read: Semiconductor ETFs Hit New High).

Strive U.S. Semiconductor ETF (SHOC) – Up 2.4%

Strive U.S. Semiconductor ETF seeks broad market exposure to the U.S. semiconductor sector. It follows the Bloomberg US Listed Semiconductors Select Total Return Index and holds 32 stocks in its basket with a heavy concentration on the top two firms. Strive U.S. Semiconductor ETF has AUM of $60 million and charges 40 bps in annual fees. It trades in a volume of 14,000 shares per day on average and has a Zacks ETF Rank #2 (Buy).

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Apple Inc. (AAPL) : Free Stock Analysis Report

Microsoft Corporation (MSFT) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Tesla, Inc. (TSLA) : Free Stock Analysis Report

Technology Select Sector SPDR ETF (XLK): ETF Research Reports

Invesco Semiconductors ETF (PSI): ETF Research Reports

Alphabet Inc. (GOOGL) : Free Stock Analysis Report

Roundhill Magnificent Seven ETF (MAGS): ETF Research Reports

MicroSectors FANG+ ETN (FNGS): ETF Research Reports

Invesco PHLX Semiconductor ETF (SOXQ): ETF Research Reports

Meta Platforms, Inc. (META) : Free Stock Analysis Report

Strive U.S. Semiconductor ETF (SHOC): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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