Why consider investing in large-cap growth stocks?

Key takeaways

• Large-cap growth stocks typically include some of the most innovative, global, and resilient companies in the market.
• QQQ’s tilt toward large and mega-cap names—especially in the tech and consumer sectors—has helped power the ETF’s long-term performance.¹
• While no strategy works in every environment, large-cap growth can offer core exposure to the forces helping shape the modern economy.

When it comes to building portfolios, different investments can play different roles. Many financial professionals think about portfolios in terms of exposure to large-cap and small-cap stocks, or growth and value stocks.

Invesco QQQ ETF currently falls into the U.S. large-cap growth “style box,” according to Morningstar.² But what does that mean, and how are large-cap growth stocks often used in portfolios? Also, how has QQQ performed against other large-cap growth strategies?

What are large-cap growth stocks?

Let’s break it down quickly. “Large-cap” refers to companies with the biggest market capitalizations—generally $10 billion or more. These firms are often well-established, widely held, and globally recognized. In other words, they’re larger and typically more established than mid- and small-cap company stocks.

“Growth” stocks, on the other hand, are companies that are expected to increase their earnings at a fast pace. At the opposite end of the spectrum are “value” stocks that may appeal more to bargain-hunting investors. Growth stocks typically have higher valuations as measured by price-to-earnings (P/E) ratio compared to value stocks.³ In other words, investors may have to pay more for the higher projected growth.

Large-cap stocks make up the biggest percentage of broad-market indexes, so it makes sense that financial professionals pay a lot of attention to this particular asset class. They are often used as one of the biggest portfolio allocations.

Diving a level deeper, large-cap growth stocks are often counted on to deliver long-term capital appreciation. Of course, volatility and market pullbacks are to be expected by long-term investors.

QQQ performance has benefited from tech, mega caps

Some investors use QQQ to get exposure to large-cap growth stocks. Although past performance is no guarantee of future results, QQQ has appeared to benefit from some key market trends over the past decade.

First, QQQ has been helped by the outperformance of the market’s largest stocks, whether they’re called “mega-cap” stocks or the “Magnificent 7,” which is comprised of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla.

QQQ tracks the Nasdaq-100® Index, the 100 largest nonfinancial stocks listed on the Nasdaq, home to some of the world’s most innovative companies. The Nasdaq contains many tech leaders, digital platforms, and consumer brands that are shaping how consumers work, shop, and connect. Typically with 100 stocks, QQQ has less holdings than the S&P 500® Index, which is one reason why QQQ has more of a bias toward mega caps.

The leadership of the market’s largest stocks (think Mag 7) over the past decade has been a tailwind. QQQ had a 10-year annualized return of 17.69% as of May 31, 2025, compared with 12.83% for the S&P 500, according to S&P Dow Jones Indices.⁴ Over the past 10 years, bigger has typically been better.

Although QQQ is more than a tech ETF, it did have 58.98% of its net assets in the tech sector as of May 31, 2025, due to the sector’s heavy presence on the Nasdaq.⁵ This sector bias has yielded a positive result, as over the past decade, tech has been the best-performing sector with the Technology Select Sector Index posting a 10-year total annualized return of 19.81% as of May 31, 2025, according to S&P Dow Jones Indices.

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.

Understanding the risks and how to consider using QQQ

Much of QQQ’s historical outperformance has come from its growth tilt—in other words, its focus on sectors like tech (Microsoft, Nvidia, Apple), consumer discretionary (Amazon, Tesla, Starbucks), and communication services (Meta, Alphabet). These companies haven’t just generated strong revenues—they have often plowed their profits back into research and development, pushing into new markets and technologies.

It’s important to note that growth stocks can also be more sensitive to rising interest rates and market cycles. That’s especially true in the sectors QQQ holds in overweight positions: tech, communications, and consumer cyclical. While these stocks may experience bigger swings during periods of uncertainty, they also have the potential to deliver some of the stronger long-term gains. Many of them started out as industry disrupters—and have kept innovating ever since.

In the end, large-cap growth strategies like QQQ can play a core role in many portfolios. While no investment is risk-free, many investors turn to large-cap growth for exposure to the companies driving economic transformation—from cloud computing to electric vehicles to Artificial Intelligence.