QQQ outperformed the S&P 500 for the second consecutive month in April, gaining 15.64% on an NAV total return basis versus the S&P 500’s 10.49%. Strong equity market performance in April appeared to be supported by improving investor sentiment amid indications of potential de-escalation in the U.S.–Iran conflict and generally strong corporate earnings reports that reflected signs of market resilience amid volatile, elevated energy prices.
Strength in equity markets was generally widespread, with mega-caps, growth, and small caps seeing stronger returns than large-cap value and mid-cap stocks. Mega caps, represented by the Nasdaq Mega Index3, saw the strongest returns, rising 17.44% in April. The Russell 1000 Growth Index gained 11.90%, while the Russell 2000 Index4, representing small caps, rose 12.21%. Meanwhile, the Russell 1000 Value Index and Russell MidCap Index5 gained 8.16% and 7.33%, respectively.
The Nasdaq-100 and S&P 500 had both fallen to 2026 year-to-date lows on March 30th, as many investors worried that a prolonged conflict between the United States and Iran could cause significant financial turbulence worldwide. After both political rhetoric and military strikes intensified in early April, a two-week ceasefire was announced on April 8th, with Iran apparently agreeing to reopen the critical Strait of Hormuz, a critical maritime oil supply route. Brent crude6 fell from its April 7th closing price of ~$109 per barrel to ~$95. The Nasdaq-100 rose 2.90% on the day, closing April 8th up 8.49% from its March 30th year-to-date low. The VIX Index7 – a commonly used benchmark for equity volatility – fell from its highest year-to-date closing level of 31.05 on March 27th to 21.04 on April 8th.
Despite the agreement, ship traffic in the Strait remained at a standstill. On April 14th, the US declared it had blockaded Iran’s ports. Iran responded by threatening to strike other ports in the Persian Gulf if any of their ships were targeted by the blockade. However, markets remained mostly optimistic that these apparent escalations may have been driving the conflict to a nearer resolution, by encouraging Iran to engage in a second round of peace talks prior to the expiration of the ceasefire. The Nasdaq-100 rose 1.29%, Brent crude fell to ~$90 per barrel, and the VIX closed at 17.48 – its lowest closing level since the outbreak of the current conflict. Notably, April 17th also marked the 13th consecutive trading day of positive increases in the Nasdaq-100. Although the Nasdaq-100 snapped its winning streak on April 18th, falling 0.32%, it continued to trend upward for the rest of the month, powered mainly by geopolitical optimism and strong corporate earnings.
Macroeconomic data prints8 were generally mixed in April, but market reactions were muted, suggesting much of the disruption may have been factored into initial reactions to developments in the Middle East. The Consumer Price Index (CPI)9 rose 0.9% month-over-month, its largest monthly increase in two years. However, Core CPI, which excludes food and energy, rose only 0.2%. The ISM Services Prices Paid Index10 and the ISM Manufacturing Prices Paid Index11, measures of input costs for services and manufacturing businesses, respectively, both saw some of their largest increases since 2022, due primarily to elevated energy costs from the closure of the Strait of Hormuz. While the ISM Services PMI indicated slower-than-expected growth in services, the ISM Manufacturing PMI expanded the most since 2022, surprising to the upside and showing strength in physical goods production. Q1 gross domestic product (GDP), reported on April 30th, came in at only +2.0% annualized in the first quarter, versus +2.3% expected. The broader equity market rally was undeterred by these mixed data releases, with both the S&P 500 and the Nasdaq-100 closing out April at their highest closing levels in 2026.
The Federal Open Market Committee (FOMC)12 met in late April and did not change the target rate, citing “solid” overall economic growth but also risks to employment and inflation stemming from the Iran war. Two of the four dissents at the meeting explicitly suggested that the Fed’s current easing bias may no longer be appropriate. As of March 31st, Fed funds futures13 suggested a 30% chance of a single rate cut by the end of 2026. As of April 30th, that chance had declined to only 10% - with an approximately 20% chance of a rate hike by the Fed’s April 2027 meeting (as of March 31st, markets expected a 30% chance of a cut by that point).
Developments in the artificial intelligence (AI) ecosystem remained a significant tailwind for equity performance in April. As customer demand for AI models accelerated, Anthropic engaged both Google and Broadcom to add multiple gigawatts of application-specific integrated circuit capacity starting in 2027. The massive buildouts for AI infrastructure – such as data centers, server racks, and memory chips – have continued to be a top theme in equity market performance.
Eight of the ten sectors represented in QQQ finished April in positive territory. Technology was the best performing sector, returning 22.70%, followed by Energy and Consumer Discretionary, which returned 9.24% and 8.58%, respectively. Real Estate was the worst performing sector, returning -14.20%, followed by Health Care and Basic Materials, which returned -4.58% and 0.38%, respectively.
QQQ’s relative outperformance versus the S&P 500 was primarily driven by its differentiated holdings in and average overweight to the Technology sector. QQQ’s Technology holdings average weight was 61.78% and returned 22.70% in April, while the S&P 500’s Technology holdings average weight was 41.08% and returned 19.14%. QQQ had an average overweight of 20.70% to the Technology sector in the month.
QQQ’s differentiated holdings in the Health Care sector were the greatest detractor to the fund’s relative performance. QQQ’s Health Care holdings average weight was 4.64% and returned -4.58% in April, while the S&P 500’s Health Care holdings average weight was 8.44% and returned -0.63%. QQQ had an average underweight of 3.80% to the Health Care sector in the month.
Announcements for 1Q2026 earnings began in April, with 46 QQQ companies announcing results. Of those 46 companies, 36 beat analysts’ expectations, eight had results in line with expectations, and two missed expectations.
Q1 earnings indicated the enduring power of the AI value chain. The major AI hyperscalers – Amazon, Alphabet, Meta, and Microsoft – all reported quarterly earnings in April. All four have committed to significant near-term capital expenditures (capex) to build out data centers and other critical AI infrastructure. In the first quarter alone, they had a collective outlay of over $130 billion, led by Amazon with $43.2 billion. The major developments, however, were in full-year capex guidance. Alphabet increased its guidance for 2026 capex to a $180-190 billion range, up from $175-185 billion previously. Microsoft, which had not previously issued full-year capex guidance, announced a target of $190 billion, approximately three times its full fiscal 2025 capex. Noting that the increase reflects “higher component pricing”, Meta updated its target from a $115-135 billion range to $125-145 billion. Amazon did not announce any changes to its 2026 capex target, but already had the highest of the four, at $200 billion. While not necessarily a traditional hyperscaler business, Tesla also announced it was revising its previous $20 billion 2026 capex estimate to $25 billion for AI-related expenses, including $3 billion earmarked for an AI chip research facility. In total, these five companies expect to spend over $725 billion – approximately equivalent to 40% of the S&P SmallCap 600’s14 total market cap at the end of April - on AI infrastructure in 2026 alone.
Market reaction to these announcements was mixed. While Alphabet and Amazon shares saw gains after their earnings reports, Microsoft, Meta, and Tesla all fell after reporting. Alphabet and Amazon saw strong results in their cloud computing businesses (Google Cloud and Amazon Web Services, respectively) in the quarter, indicating the companies had been able to capitalize on increased AI-related demand, helping to validate the business case for the massive buildouts. While Microsoft also saw significant growth in Azure, its cloud computing business, management projections of only “modest acceleration” in that segment for the remainder of the year soured market sentiment and refocused investors on the cost side of the equation. Meta also fell after reporting earnings, as many investors considered whether the revenue growth the company was projecting would be sufficient to justify the increased overall cost estimate. All four of these companies had beaten bottom-line analyst profit estimates for the quarter. The bifurcation in post-earnings stock fluctuations illustrates that investors may now be contextualizing massive near-term spending plans within current results.
The AI hypserscalers’ significant AI infrastructure build-out has also driven significant business for other QQQ companies participating in the AI value chain. The increasing prevalence of agentic AI applications has caused a resurgence in the relative demand for CPUs to GPUs. While AI model training requires about an 8:1 GPU/CPU ratio, AI inference processes require about 4:1 GPU/CPU. Agentic workflows may increase CPU requirements even further, as CPUs are better equipped to handle sequential reasoning and complex workflows. The increasing prevalence of agentic AI applications appears to have reignited investor interest in CPU-heavy businesses such as Intel and AMD. Agentic AI workflows have also driven significant increases in the storage and memory required to run AI models. As such, computer storage businesses that specialize in high-capacity HDDs, such as Seagate Technology, have also attracted renewed investor attention.
Source: Bloomberg, L.P., and Nasdaq as of 4/30/2026.
Standardized performance - Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and Shares, when redeemed, may be worth more or less than their original cost. See invesco.com to find the most recent month-end performance numbers. Market returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times. Fund performance reflects applicable fee waivers, absent which, performance data quoted would have been lower. Returns less than one year are cumulative. Invesco QQQ’s total expense ratio is 0.18%.
For the month of April, shares traded of QQQ decreased by 40.99% and notional value traded decreased by 37.48% month-over-month. The month saw an average of 43.72 million shares traded each day (vs. 74.09 million last month) for an average daily value of $27.46 billion (vs. $43.91 billion last month). That compares to averages of 65.09 million shares and $7.53 billion over the life of the fund, and 53.77 million shares and $31.69 billion for the past 12 months.
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