The S&P 500 and Nasdaq Composite Index wrapped up their biggest week since early November 2023, gaining 2.7% and 4.2%, respectively. The surge was driven by a rally in big tech stocks, especially Alphabet GOOGL and Microsoft MSFT, which reignited confidence about AI growth following their blowout first-quarter earnings.
The surge came in the same week when Meta Platforms META dampened the market mood after issuing weak revenue guidance and predicting higher capital expenses for 2024 (read: Forget Meta-Led Slump: 3 Reasons to Buy Tech ETFs on the Dip).
While most of the ETFs saw smooth trading last week, we have highlighted five tech ETFs that have outperformed, gaining in double-digits. These include Global X Blockchain ETF BKCH, VanEck Vectors Digital Transformation ETF DAPP, iShares Blockchain and Tech ETF IBLC, Invesco PHLX Semiconductor ETF SOXQ and SPDR S&P Semiconductor ETF XSD.
Snapshot of Alphabet Earnings
Alphabet rose 10%, its biggest one-day jump since July 2015, and topped $2 trillion in market cap for the first time since November 2021. The strong performance came following its robust quarterly results, wherein it beat estimates on both earnings and revenues. The company also announced its first-ever cash dividend of 20 cents per share and authorized a stock repurchase program worth $70 billion (read: Google Heavy ETFs Surge Following Upbeat Q1 Earnings).
Earnings of $1.89 per share surpassed the Zacks Consensus Estimate of $1.49 and improved from the year-ago earnings of $1.17. Revenues grew 16.4% to $67.59 billion and edged past the consensus estimate of $66.04 billion.
Alphabet is now the world’s fourth most valuable public company, behind Nvidia NVDA, Apple AAPL and Microsoft.
Snapshot of Microsoft Earnings
Shares of Microsoft rose 2% on the day after the world’s largest software maker beat earnings and revenue estimates on strong demand for cloud and artificial intelligence offerings. Earnings per share came in at $2.94, beating the Zacks Consensus Estimate of $2.81 and were 20% higher than the year-ago earnings. Revenues grew 17% year over year to $61.9 billion, edging past the consensus estimate of $60.63 billion.
The software maker invested billions of dollars into AI in a bid to turbocharge its growth, particularly its cloud computing services, and is now reaping the fruits. About 7% of the increase in Azure revenues came from AI. Microsoft is now emphasizing AI transformation through its new offerings like Microsoft Copilot. “Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry,” Microsoft CEO Satya Nadella said (read: ETFs to Buy as Cloud, AI Power Microsoft’s Q3 Earnings).
Promising Growth Outlook
Hopes of cutting interest rates later this year support 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. Additionally, 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.
Let’s dig into the details of the abovementioned ETFs:
Global X Blockchain ETF (BKCH) – Up 12.4%
Global X Blockchain ETF seeks to invest in companies positioned to benefit from the increased adoption of blockchain technology, including companies in digital asset mining, blockchain and digital asset transactions, blockchain applications, blockchain and digital asset hardware, and blockchain and digital asset integration. Global X Blockchain ETF follows the Solactive Blockchain Index and holds 25 stocks in its basket. It has gathered $137.9 million in its asset base and trades in an average daily volume of 43,000 shares. BKCH charges 50 bps in annual fees.
VanEck Vectors Digital Transformation ETF (DAPP) – Up 12.3%
VanEck Vectors Digital Transformation ETF aims to offer exposure to companies that are at the forefront of digital asset transformation, such as digital asset exchanges, payment gateways, digital asset mining operations, software services, equipment and technology or services to the digital asset operations, digital asset infrastructure businesses or companies facilitating commerce with the use of digital assets. VanEck Vectors Digital Transformation ETF tracks the MVIS Global Digital Assets Equity Index and holds 22 securities in its basket. It charges 51 bps in annual fees and trades in an average daily volume of 272,000. DAPP has accumulated $105.2 million in its asset base.
iShares Blockchain and Tech ETF (IBLC) – Up 10.6%
iShares Blockchain and Tech ETF seeks exposure to a wide variety of companies that are involved in the development, innovation and utilization of blockchain and crypto technologies. It follows the NYSE FactSet Global Blockchain Technologies Index and holds 33 stocks in its basket. iShares Blockchain and Tech ETF has gathered $19.5 million in its asset base and charges 47 bps in annual fees. It trades in a volume of 16,000 shares per day on average.
SPDR S&P Semiconductor ETF (XSD) – 10.4%
SPDR S&P Semiconductor ETF offers exposure to the semiconductor segment of the broader technology sector and tracks the S&P Semiconductor Select Industry Index. It holds 35 stocks in its portfolio. SPDR S&P Semiconductor ETF has AUM of $1.4 billion and an average daily volume of about 56,000 shares. SPDR S&P Semiconductor ETF charges 35 bps in fees per year and has a Zacks ETF Rank #1 (Strong Buy).
Invesco PHLX Semiconductor ETF (SOXQ) – Up 10.1%
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. Invesco PHLX Semiconductor ETF has accumulated $352.5 million in its asset base. It charges 19 bps in annual fees and trades in an average daily volume of 257,000 shares. Invesco PHLX Semiconductor ETF has a Zacks ETF Rank #1 (read: Can Q1 Earnings Results Recharge Semiconductor ETFs?).
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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
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
SPDR S&P Semiconductor ETF (XSD): ETF Research Reports
Global X Blockchain ETF (BKCH): ETF Research Reports
VanEck Digital Transformation ETF (DAPP): ETF Research Reports
Invesco PHLX Semiconductor ETF (SOXQ): ETF Research Reports
Meta Platforms, Inc. (META) : Free Stock Analysis Report
iShares Blockchain and Tech ETF (IBLC): ETF Research Reports
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