Invesco QQQ monthly review

Overview

• For the month of May, QQQ saw an NAV total return of 9.11% and outperformed the S&P 500 Index which returned 6.29%. The Russell 1000 Growth Index returned 8.85% while the Russell 1000 Value Index returned 3.51%, both underperforming QQQ.
• QQQ’s relative outperformance vs. the S&P 500 was driven by its overweight exposure within the Technology sector and its underweight exposure and differentiated holdings within the Health Care Sector. The Technology and Health Care sectors were the biggest contributors to relative performance vs. the S&P 500 Index.
• QQQ saw inflow of ~$8.15 billion.
• QQQ ended the month with $334.12 billion in AUM and remained the 5th largest ETF in the US (based on AUM).
• For the month of May, shares traded of QQQ declined by 27.27% month-over-month along with notional value traded declining by 17.25% month-over-month.¹

Market Recap

In May, U.S. equity markets rallied while volatility began gradually subside from the April’s elevated levels as trade tensions eased. The Nasdaq-100® Index posted very strong results as the index rose 9.13% in May from its April closing level, marking the strongest monthly performance for the Nasdaq 100 since November 2023, when the index rose 10.82%. May rally was enough to bring the Nasdaq 100 Index to a closing level of 21,341, or 0.68% above its 2024 year-end level of 21,197. Further, the Nasdaq 100 Index closed the month 24.87% above its lowest closing level of 2025 achieved on April 8^th when the Nasdaq 100 ended the day at a level of 17,090. The S&P 500 also rallied, closing May up 6.29% from the previous month.

The VIX Index, a commonly used gauge for volatility and investor fear, closed May at 18.57, breaking trend with the previous three months on consecutively higher closing levels for the index.² While volatility did gradually subside in May when compared to the levels achieved in April, volatility was not necessarily muted. Over the last 10 years, the average daily closing price for the VIX index was 18.52. In May, the VIX index closed above the 10-year average close in 16 of 22 trading sessions signaling residual investor discomfort. The Nasdaq 100 Index had an average daily trading range of 1.33%, as measured by the relative spread from the daily high and low price, compared to April’s range of 3.64% further underscoring the decrease in volatility.

Despite reported progress regarding US trade policy negotiations concerns around longer term resolution and additionally the potential detrimental impact to US companies earnings outlooks remain as earnings revisions have continued to be negative in US markets. On May 8^th as President Trump announced a trade deal with the U.K. Arguably, one of the most significant trade developments was announced on May 12, when a 90-day reprieve between the U.S. and China was announced. The United States and China agreed to temporarily lower tariffs on imported goods with the U.S. lowering tariff levies from 145% to 30% on Chinese goods and China lowering levies from 125% to 10% on imported U.S. goods. The agreement would allow the U.S. and China three months to work toward a more longstanding agreement and offered the option to extend the truce, so long as negotiations between the two countries continued in good faith. This development was viewed by market participants as a significant de-escalation between the two countries. Markets responded favorably pre-market news and the Nasdaq 100 closed up 3.78% while the S&P 500 rose 2.60% on May 12^th.

However, concerns around US and China relations were reignited at the end of the month with President Trump commenting that China had violated every aspect of their previous agreement stoking concerns as Bloomberg reported the White House was considering broader technology sanctions against China. Additionally, on May 13th President Trump announced about $2 trillion in investment agreements with Saudi Arabia, Qatar and the UAE which Bank of America noted could generate between $3 to $5 billion in AI infrastructure projects for the U.S. annually.

In mid-May, the market received another positive report on the inflation front. The Consumer Price Index (CPI) reading continued to trend lower coming in at 2.3% as inflation has inched closer toward the Federal Open Market Committee’s (FOMC) stated 2% target.^3,4 The April year-over-year (YoY) Core CPI reading reported in May (which strips out the more volatile food and energy components) was reported in line with market expectation at 2.8%. Additionally, the April Core Personal Consumption Expenditure YoY (PCE), reported in May, printed was reported at 2.5%, in line with market expectations.⁵ As of the end of April the markets expected the FOMC to cut interest rates four times by year end. By the end of May, rate cut expectations were halved with the market anticipating only two cuts by year end.

The U.S. bond market became more unsettled in May particularly on the longer end of the curve. On May 16th, Moody’s downgraded the US credit rating from AAA to Aa1 citing the increase in government debt, high interest payment ratios, persistent and large fiscal deficits and concerns over the sustainability of the US government's fiscal path. This was further exacerbated by the Trump Administration's “Big Beautiful Bill”, narrowly passing through the house of representatives on May 22nd. The Congressional Budgets Office’s Initial estimates concluded that the bill would add $3.8 trillion towards the U.S. fiscal deficit, stoking concerns in the U.S. Treasury markets.

QQQ Performance

From a sector perspective, eight of the ten sectors that QQQ has exposure to finished in positive territory for May. Technology was the best performing sector, increasing by 11.23% for the month. Relative QQQ outperformance versus the S&P 500 was driven by its overweight exposures within Technology and by underweight exposure and differentiated holdings within Health Care sectors. The Technology sector averaged a 58.57% weighting for the month and saw a total return of 11.23%, compared to the sector’s average weight of 36.31% in the S&P 500 and a total return of 11.32%. Within QQQ, the Health Care sector averaged a 5.23% weighting for the month and saw a total return of 0.31%, compared to the sector’s average weight of 9.39% in the S&P 500 and a total return of -5.81%.

Standardized performance - Performance quoted is past performance and cannot guarantee of comparable future results; current performance may be higher or lower. Visit invesco.com/performance for the most recent month-end performance. Investment returns and principal value will vary; you may have a gain or loss when you sell shares. Fund performance reflects fee waivers, absent which, performance data quoted would have been lower. Invesco QQQ’s total expense ratio is 0.20%. Index performance does not represent fund performance. Please keep in mind that high, double-digit and/or triple-digit returns are highly unusual and cannot be sustained.

Consumer Staple and Real Estate were the worst performing sectors in QQQ, down 1.20% and 0.82%, respectively. Consumer staples averaged a 2.86% weight in QQQ for May, while Real Estate averaged a 0.20% weighting over the course of the month.

Microsoft reported quarterly results following market close on April 30. Microsoft reported very strong results beating consensus analyst estimate from both a top and bottom-line perspective. Microsoft reported revenue of ~$70.1B compared to consensus estimate of ~$68.5B. Further, Microsoft also exceeded analyst revenue expectations within the company’s cloud segments with reported Microsoft Cloud revenue of $42.4B compared to an estimate of $42.2B and Intelligent Cloud revenue of $26.8B compared to an estimates of $25.99B. Azure and other cloud services revenue increased 35% year over year, exceeding analyst year over year growth expectations of 31%, with 16 points of Azure growth attributable to Artificial Intelligence (AI) compared to analyst expectations of 15.6 points. 

Microsoft reported operating income also exceeded analyst expectation with reported operating income of $32B compared to consensus estimate of $30.31B. Microsoft also reported strong Capital Expenditure (Capex) of $16.75B, ~53% higher than the reported prior year’s 3Q results of $10.95B.⁶ Reported capex was ~3% higher than analyst expectation of $16.28B. Market participants responded very favorable to the strong report with shares of Microsoft jumping 7.63% on May 1^st on the first day following the earnings announcement.

Nvidia also reported quarterly results on May 28^th post market close. Nvidia’s announcement was one of the most hotly anticipated and closely watched by market participants given their size and importance within the artificial intelligence arena. Nvidia reported yet another strong quarter beating consensus analyst estimates from a top-line perspective, while missing expectation from a bottom-line perspective. Nvidia reported top-line revenue of $44.1 billion beating consensus estimate by $727.8 million or 1.7% above estimates. Revenue for Nvidia increased 69% from a year earlier. 

Additionally, Nvidia reported data center revenue of $39.1 billion, equivalent to a 73% increase from a year earlier. Growth in data center revenue was primarily driven by increasing demand for accelerated computing platform usage for AI segments such as large language models, recommendations engines, as well as generative and agentic AI applications. While AI associated segments were the primary driver of the strong report, gaming revenue also experienced strong growth. Gaming revenue was reported at $3.8 billion, marking year over year growth of 42% for the segment. 

Despite the strong top-line growth, Nvidia reported operating margin of 49.1% which was down from 64.9% a year earlier. The decrease in operating margin was primarily due to a ~$4.5 billion write-off excess inventory and purchase obligations. This was the result of the new U.S. government's rule implemented in April 2025 requiring a license to export H20 products to China. Nvidia reported net income of $18.8 billion missing consensus estimates of ~$19.3 billion. Nvidia also announced significant developments on supercomputing and AI in way of partnerships with Foxconn and the Taiwan government to build an AI factory supercomputer. Additionally, Nvidia has also partnered with HUMAIN to build AI factories in Saudi Arabia to further drive growth in artificial intelligence development. Nvidia shares rose 3.25% following the May 28^th announcement.

Trading Stats

For the month of May, shares traded of QQQ declined by 27.27% month-over-month along with notional value traded declining by 17.25% month-over-month. The month saw an average of 47.31 million shares trade each day (vs. 65.06 million last month) for a value of $24.09 billion (vs. $29.14 billion last month). That compares to averages of 65.47 million shares and $6.65 billion over the life of the fund, and 37.81 million shares and $18.38 billion for the past 12 months.