The Technology Select Sector SPDR Fund ETF (NYSEARCA:XLK), which tracks S&P 500’s information technology sector, gained 8.38% so far this quarter, outperforming the 4.56% rise in the broader S&P500 Index.
The information technology sector, which consists of stocks including Nvidia (NVDA), First Solar (FSLR), and Apple (AAPL) led the pack among the S&P500 sectors with the highest second-quarter growth.
The sector was the highest performer in the S&P 500 Index, rising 8.38%, followed by Utilities (XLU) and Communications (XLC) both outperforming the benchmark index during the quarter too.
Nvidia (NVDA) saw the biggest growth in the S&P 500 IT index, rising nearly 36.73% during the quarter, having the lead among chipmakers in supplying the necessary units for the AI boom.
First Solar (FSLR) came in a close second, rising 33.57%, benefiting from the AI frenzy, as the demand for cheap energy increased. Sales and profit of its energy panels rose well past analyst estimates in its previous quarter results.
Investors were enthusiastic as Nvidia and Apple posted results that topped Wall Street estimates, piggybacking on the AI craze for data centers and servers. Apple also launched its $110 billion buyback program, raising its quarterly dividend to $0.25 per share.
Apple (AAPL) gained 9.40% so far this year.
Industries Second-Quarter Performance
Software & Services rose 3.4% during the second quarter. Technology, Hardware, and Equipment rose 20.22% and Semiconductors & Semiconductor Equipment rose 21.31%.
U.S. stock fund flow in and out of the sector, while average on a whole throughout the second quarter, rose and fell significantly during a week in June. The information technology sector-focused ETF (XLK) had a net outflow of $210.21 million as of June 27.
Top 5 performers for Q2:
- Nvidia (NVDA) +36.73%
- First Solar (FSLR) +33.57%
- Teradyne (TER) +31.43%
- Apple (AAPL) +22.82%
- NetApp (NTAP) +22.70%
Bottom 5 performers of Q2:
- EPAM Systems (EPAM) -31.88%
- Intel (INTC) -29.88%
- Paycom Software (PAYC) -28.12%
- Global Payments (GPN) -27.65%
- Dayforce (DAY) -25.09%
What Quantitative Measures say?
XLK received a Strong Buy rating from Seeking Alpha’s Quant Rating system, with a score of 4.62 out of 5. The sector got an A+ for liquidity and momentum, an A for expenses, and a B for dividends. However, it was given a C- in the prospect of risk.
What do analysts expect?
Three analysts surveyed by Seeking Alpha in the last 90 days gave the sector a Buy. Another three recommended a Hold, with one recommending a Sell and the remaining one recommending a Strong Sell.
Seeking Alpha analyst Komal Sarwar wrote that investing in tech ETFs could offer exposure to the tech sector while lowering risks associated with single-stock investments.
However, another report by analyst Vladimir Dimitrov said that due to its weighting methodology, the ETF is extremely concentrated and NVDA is the sole reason why the XLK outperformed the broader technology sector.
“Extreme concentration within the ETF is making it less likely that it will continue to outperform more diversified alternatives,” he added.
