The Zacks Analyst Blog Highlights First Trust SkyBridge Crypto Industry & Digital Economy ETF, The Spear Alpha ETF, VanEck Vectors Digital Transformation ETF, TrueShares Technology, AI and Deep Learning ETF and Strive U.S. Semiconductor ETF
Wall Street staged a solid comeback after a sharp decline in early April triggered by President Trump's "Liberation Day" tariff announcement. The S&P 500 has rallied more than 18% from the April 7 low, primarily driven by rising hopes of a U.S. trade deal with major partners. Solid corporate earnings from leading tech players have also led to renewed optimism in the stock market.
President Donald Trump announced a trade deal with the United Kingdom, marking the first major agreement since the United States imposed widespread tariffs earlier this year. He is slated to meet with Chinese officials this weekend to discuss trade. The meeting would be the first major talks between the countries since Trump raised tariffs on imports from China to 145% last month.
While the rally has been broad-based across all segments, the technology sector has been at the forefront. The tech-heavy Invesco QQQ has risen 14.3% over the past month. As such, we have highlighted five ETFs from the sector that have led the rally over the past month.
Strong quarterly earnings reports from software giant Microsoft (MSFT) and Facebook parent Meta Platforms (META) spread strong optimism not only in the tech sector but the entire market. The dual earnings outperformance underscores that strong demand for AI is helping both companies navigate tariff-driven economic uncertainty. Amazon (AMZN) and Apple (AAPL) also came up with earnings and revenue beats. However, Apple warned of a $900 million tariff headwind in the ongoing quarter, while Amazon also issued a cautious outlook due to uncertain consumer demand in the face of shifting tariff policies.
Per the Zacks Earnings Trends report, second-quarter earnings estimates for the tech sector appear to have reversed course over the last two weeks, with estimates starting to go back up after steadily coming down earlier.
The Trump administration is preparing to roll back a key set of semiconductor export restrictions, originally introduced during the final days of the Biden administration. The regulation, which was scheduled to take effect on May 15, was designed to restrict sales of artificial intelligence (AI) chips to countries such as India, Switzerland, Mexico and Israel.
Though the AI trade has cooled off significantly this year, its adoption will again provide a lift to tech stocks. The expansion of AI applications holds the promise of ushering in fresh opportunities for growth within the sector. Tech companies have poured billions into data centers and AI chips to support the growth of AI models (read: Why Big Tech ETFs Still Remain Great Bets).
The global digital shift has accelerated e-commerce for everything, ranging from remote working to entertainment and shopping, thereby building the 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 were not enough, the technology sector has a solid Zacks Sector Rank, being in the top 50%. After a massive decline this year, the sector has become attractively valued with a P/E of 20.89% compared with 18.33% for the broad market index.
First Trust SkyBridge Crypto Industry and Digital Economy ETF is designed to provide exposure to companies that SkyBridge believes are driving cryptocurrency, crypto assets and digital economy-related innovation. SkyBridge identifies securities primarily via 'bottom-up' research focused on finding companies leading in the crypto industry ecosystem. First Trust SkyBridge Crypto Industry & Digital Economy ETF holds 25 stocks in its basket and charges 85 bps in fees per year from investors. It has amassed $92.9 million in its asset base and trades in an average daily volume of 50,000 shares.
The Spear Alpha ETF – Up 29%
The Spear Alpha ETF is an actively managed fund that invests in companies poised to benefit from breakthrough trends in industrial technology. The ETF's objective is to find underappreciated opportunities across different industrial supply chains that are beneficiaries of secular themes such as enterprise digitalization, automation & robotics, artificial intelligence, environmental focus and decarbonization, photonics and additive manufacturing, and space exploration. The Spear Alpha ETF holds 26 stocks in its basket and trades in an average daily volume of 43,000 shares. It has accumulated $48.1 million in its asset base and charges 75 bps in annual fees (read: Inside Last Week's Wall Street Rally & Best-Performing ETF Areas).
VanEck Vectors Digital Transformation ETF – Up 24.7%
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 23 securities in its basket. It charges 51 bps in annual fees and trades in an average daily volume of 334,000. DAPP has accumulated $151.4 million in its asset base.
TrueShares Technology, AI and Deep Learning ETF – Up 23.3%
TrueShares Technology, AI and Deep Learning ETF is an actively managed fund targeting companies with leading-edge artificial intelligence, machine learning, or deep-learning technology platforms, algorithms, or applications that are believed to provide distinct competitive advantages in an industry historically characterized by a winner-take-all consolidation behavior. TrueShares Technology, AI and Deep Learning ETF holds 24 stocks in its basket and charges 69 bps in fees per year. LRNZ has amassed $29.5 million in its asset base and trades in an average daily volume of 6,000 shares.
Strive U.S. Semiconductor ETF – Up 23.1%
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. Strive U.S. Semiconductor ETF has an AUM of $71.7 million and charges 40 bps in annual fees. It trades in a volume of 18,000 shares per day on average and sports a Zacks ETF Rank #1 (Strong Buy).
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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TrueShares Technology, AI and Deep Learning ETF (LRNZ): ETF Research Reports
VanEck Digital Transformation ETF (DAPP): ETF Research Reports
Spear Alpha ETF (SPRX): ETF Research Reports
First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT): ETF Research Reports
Strive U.S. Semiconductor ETF (SHOC): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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