QQQ outperformed the S&P 500 in August, rising 4.22% at NAV versus the S&P 500’s 2.72% gain. After a difficult July for mega-cap growth stocks, August saw a resumption in enthusiasm for the group, contributing to gains across major equity indexes. While investors continued to watch for further clues from new Federal Reserve (Fed) Chairman Kevin Warsh on monetary policy and to assess the implications of several notable U.S. Treasury actions, corporate earnings results were constructive for overall sentiment. During its earnings call, NVIDIA management indicated that it expected fiscal 2028 revenue growth to significantly exceed consensus estimates, with potential additional upside should supply constraints ease. These comments appeared to reassure many investors that demand for artificial intelligence (AI) products and supporting infrastructure remains robust.
Many investors appeared to prefer larger-capitalization and growth stocks over small-cap and value stocks in the month. Mega-cap growth, represented by the Nasdaq-100 Index, was the top performer, returning 4.24%. The Russell 1000 Growth Index posted a gain of 3.73% but still trailed the Nasdaq-100. Large-cap securities, represented by the S&P 500 Index, gained 2.72%, but still lagged growth and mega-cap stocks. The Russell 1000 Value Index rose 2.03% but underperformed large-cap and growth. Small-cap stocks, represented by the Russell 2000 Index3, saw weaker gains, with a return of only 0.98%. Mid-cap securities, represented by the S&P MidCap 4004, were one of the weakest equity segments in August, rising only 0.15%.
August was a month of competing catalysts. Corporate earnings were generally constructive, while macroeconomic data was mixed. Continued expansion in economic activity contrasted with signs of a cooling labor market and persistent inflation. Deteriorating negotiations between the U.S. and Iran and renewed exchanges of fire between the two countries late in the month contributed to an increase in Brent crude oil5 prices, which closed the month at over $90 per barrel and raised concerns about additional inflationary pressure on the global economy.
Early in August, the U.S. Treasury announced that it had conducted a joint intervention with Japan’s Ministry of Finance in late July to support the yen, partially explaining the yen’s rapid appreciation from 163.85 per dollar on July 28th to 157.18 per dollar on August 3rd. The currency subsequently weakened and ended August at 159.74 per dollar.
Additionally, on August 19th, the Treasury announced it would significantly increase its buybacks of 10-, 20-, and 30-year Treasury securities to provide “greater liquidity support.” The Treasury’s $25 billion 30-year bond auction on August 13th cleared at a yield of 5.216% – the highest auction yield for that maturity since 2001 – and spurred a bond selloff that saw 30-year U.S. Treasury yields reach 5.31% on August 17th, their highest level since June 2007. Although 30-year yields declined immediately following the buyback announcement, they ended August at 5.24%, little changed from July’s 5.27% close and well above their 2025 year-end level of 4.84%. Elevated yields can increase borrowing costs and may weigh on future economic activity.
Macroeconomic data prints6 in August were mixed. The ISM Manufacturing Purchasing Managers’ Index (PMI)7 and the ISM Services PMI8 increased 2.3 points to 55.6 and 0.1 point to 54.1, indicating that both the manufacturing and services segments of the economy remain in expansion. Nonfarm payrolls declined by 23,000 (versus consensus expectations for an 80,000 increase), initially suggesting less need for a rate increase by the Fed. Inflation was generally in line with expectations: the headline Consumer Price Index (CPI)9 rose 0.1% month-over-month and 3.4% year-over-year, while CPI ex-food and energy rose 0.2% month-over-month and 2.5% year-over-year. The Personal Consumption Expenditures Price Index (PCE) ex-food and energy10, the Fed’s preferred inflation gauge, rose 0.2% month-over-month and 3.3% year-over-year. While the inflation prints were generally aligned with investor expectations, the year-over-year readings remain notably above the Fed’s 2% inflation target.
At the Federal Reserve’s Jackson Hole Economic Policy Symposium on August 28th, Chairman Warsh commented that the Fed would have “work to do” if inflation did not appear to be moving toward its target. Market-implied expectations for a rate increase at the Fed’s September meeting rose from just under 36% before the symposium to just over 65% at the end of the month.
Seven of the nine sectors represented in QQQ finished August in positive territory. Health Care was the best performing sector, returning 10.10%, followed by Telecommunications and Technology, which returned 8.12% and 4.94%, respectively. Industrials was the worst performing sector, returning -3.51%, followed by Consumer Staples and Utilities, which returned -0.73% and -0.64%, 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 66.23% and returned 4.94% in August, while the S&P 500’s Technology holdings average weight was 43.68% and returned 4.58%. QQQ had an average overweight of 22.56% to the Technology sector in the month.
QQQ’s underweight in the Energy sector was the greatest detractor from the fund’s relative performance. QQQ’s Energy holdings average weight was 0.52% and returned 2.47% in August, while the S&P 500’s Energy holdings average weight was 3.38% and returned 6.90%. QQQ had an average underweight of 2.86% to the Energy sector in the month.
Earnings season continued through August, with several major QQQ companies announcing quarterly results. Of the 45 companies held in QQQ that announced earnings results in August, 30 of them, representing an aggregate portfolio weight of approximately 29.00%, recorded earnings per share (EPS)11 above consensus estimates. The remaining 15 companies, representing an aggregate portfolio weight of approximately 5.89%, missed consensus estimates.
NVIDIA, the world’s leading provider of AI computing infrastructure, reported earnings after market close on August 26th. As of the end of August, it was the largest company in the world by market capitalization ($5.32 trillion) and the largest holding in both QQQ and the S&P 500, at 8.52% and 8.09%, respectively. Investors have generally viewed NVIDIA’s fundamental results as an indicator of the health of the AI trade due to the company’s size and significant competitive position within the industry.
The company reported above-consensus revenue and earnings, including total revenue of $96.2 billion versus the $92.4 billion estimate and net income of $59.7 billion versus the $52.0 billion estimate. Despite the beat, the stock initially declined after forward revenue guidance for the third quarter disappointed investors. However, the stock rallied during the earnings conference call as management indicated the company expected 70% revenue growth in fiscal 2028 – substantially above the ~45% consensus estimate – and that growth could be even higher if not for supply constraints. These comments appeared to indicate that broad-based demand for AI products and technologies remains strong. NVIDIA’s stock ended August up 9.98%.
Space Exploration Technologies, commonly known as SpaceX, reported earnings on August 4th – the first quarterly earnings report since the company’s initial public offering (IPO)12 on June 12th. SpaceX was added to the Nasdaq-100 Index and QQQ in July as the first Fast Entry inclusion, under the Nasdaq-100 Index’s updated May 2026 rules. Although SpaceX’s total market capitalization was over $1.95 trillion as of the end of August, it was only a 1.21% position in QQQ at the end of the month, because most SpaceX shares remained closely held and were excluded from the company’s free-float-adjusted13 market capitalization.
SpaceX beat both revenue and EPS estimates, posting $7.81 billion in revenue versus consensus estimates of $6.83 billion and a loss per share of $0.09 versus an estimated loss range of $0.15 to $0.24 per share. The Connectivity segment, representing the company’s satellite internet business, accounted for over half of revenue at $4.29 billion, while the AI segment accounted for slightly over a third at $2.56 billion. The Space segment reported $0.96 billion in revenue. Despite the beat, SpaceX shares initially fell after the report as many investors worried about the pace of the company’s spending.
On August 6th, two days after its first earnings report, approximately 900 million additional SpaceX shares became eligible for sale – more than doubling the company’s free-floating shares. Despite the potential for insider selling to significantly pressure the stock, SpaceX shares rose 6.14% on August 6th, and 15.83% on August 7th. This event may have reassured investors that the stock could absorb substantial increases in potentially tradable shares without immediate downward price pressure. SpaceX stock finished the month up 32.59% at $143.69, above its IPO price of $135.00 per share.
Source: Bloomberg, L.P., and Nasdaq as of 8/31/2026.
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 August, shares traded of QQQ decreased by 18.39% and notional value traded decreased by 16.29% month-over-month. The month saw an average of 33.20 million shares traded each day (vs. 40.68 million last month) for an average daily value of $23.82 billion (vs. $28.46 billion last month). That compares to averages of 64.80 million shares and $7.80 billion over the life of the fund, and 52.47 million shares and $33.34 billion for the past 12 months.
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All data is from Bloomberg, L.P. as of 8/31/2026, unless otherwise noted.
Past performance is not a guarantee of future results.
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The opinions expressed are those of the author, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.
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The Index and Fund use the Industry Classification Benchmark (“ICB”) classification system which is composed of 11 economic industries: basic materials, consumer discretionary, consumer staples, energy, financials, health care, industrials, real estate, technology, telecommunications and utilities.