The Nasdaq-100 is house to 100 of the most important nonfinancial corporations listed on the Nasdaq inventory trade, together with every of the “Magnificent Seven,” which have a mixed worth of $15 trillion. In different phrases, it is an excellent proxy for the efficiency of the expertise and technology-adjacent industries.

The Nasdaq-100 was down by as a lot as 23% from its report excessive in April, inserting the index in a technical bear market. Buyers have flocked to the security of money amid rising financial and political uncertainty, triggered by the tariffs President Donald Trump lately enacted on imported merchandise from America’s buying and selling companions. Nevertheless, if historical past is any information, this may really be a good time to purchase the index.

The Invesco QQQ Belief (QQQ 0.17%) is an exchange-traded fund (ETF) that tracks the efficiency of the Nasdaq-100 by sustaining an equivalent portfolio of shares, so it provides traders a easy approach to personal the whole index.

Picture supply: Getty Pictures.

The Magnificent Seven could lead on the Nasdaq out of its droop

The Magnificent Seven is a gaggle of seven of the most important shares within the U.S. Wall Road analysts gave them the nickname in 2023 not only for their measurement, but additionally as a result of they’ve constantly led the broader market larger over the previous few years. They signify a whopping 41.3% of the whole worth of the Invesco QQQ Belief (and the Nasdaq-100), so that they have a large affect over its efficiency:

Knowledge supply: Invesco. Portfolio weightings are correct as of April 25, 2025, and are topic to alter.

The Magnificent Seven shares are down by a median of 15% this yr amid the broader market sell-off, led by Tesla, which has declined 29% on the again of sentimental demand for the corporate’s electrical automobiles. However the draw back for the remainder of this group is perhaps short-lived given their earnings energy. Alphabet, for instance, simply delivered a a lot stronger set of monetary outcomes than Wall Road anticipated within the first quarter of 2025, with its web revenue (revenue) rocketing larger by 46% yr over yr.

Trying past the current quarter, synthetic intelligence (AI) might be a long-term tailwind for Alphabet, Amazon, and Microsoft due to their rising portfolio of AI providers that they promote through their cloud platforms. They provide industry-leading information middle infrastructure and a number of ready-made massive language fashions (LLMs), that are two of the primary elements builders have to create AI software program.

Actually, every of them is experiencing extra demand for computing capability than they’ll provide, which is a giant tailwind for an additional member of the Magnificent Seven: Nvidia. The corporate makes the world’s most superior chips for processing AI workloads, and its information middle income surged by 142% to $115.2 billion throughout its fiscal yr 2025 (ended Jan. 26). The end result contributed to a report $2.99 in earnings per share, and following the current dip in its inventory, Nvidia is now buying and selling at a discount valuation relative to its 10-year common.

However the Invesco QQQ Belief is not completely concerning the Magnificent Seven. In its listing of top-20 holdings, traders will even discover streaming big Netflix, retail powerhouse Costco Wholesale, telecommunications supplier T-Cell, and AI software program dynamo Palantir Applied sciences.

Why now is perhaps a good time to purchase this Invesco ETF

This Invesco ETF has weathered at least 5 different bear markets because it was established in 1999, and every of them was triggered by a singular financial shock:

• 2000: The dotcom web bubble burst, triggering a recession within the U.S. and a three-year droop within the Nasdaq-100.
• 2008: The housing bubble burst, which culminated within the International Monetary Disaster.
• 2018: President Trump enacted a sequence of tariffs throughout his first time period in workplace, which sparked fears of a world commerce conflict.
• 2020: The COVID-19 pandemic virtually introduced the worldwide economic system to its knees.
• 2022: Inflation spiked to a 40-year excessive, which drove a fast enhance in rates of interest and a sell-off in higher-risk property like shares.

However even after accounting for all of these bear markets — and each smaller sell-off in between — this Invesco ETF nonetheless delivered a compound annual return of 10% between 1999 and 2024.

The present bear market is unlikely to derail that long-term development. President Trump has already pared again a number of the tariffs he introduced on “Liberation Day” on April 2, and his administration says dozens of nations have come to the desk to barter new commerce offers. The same sequence of occasions adopted Trump’s first spherical of tariffs in 2018, and it paved the best way for a whopping 38% acquire within the Nasdaq-100 the very subsequent yr.

Plus, the tariffs solely affect bodily imports, which implies software program, cloud providers, and different digital items aren’t dealing with any penalties (but). That is nice information for corporations like Alphabet, Microsoft, and Amazon. Furthermore, semiconductors are exempt from the extra aggressive portion of Trump’s tariffs as a result of the president desires the U.S. to stay a pacesetter within the AI race. That advantages Nvidia, along with Broadcom, Superior Micro Units, and Micron Know-how, that are additionally within the Nasdaq-100.

Consequently, affected person traders may wish to use the present bear market within the Nasdaq-100 as a chance to take a long-term place within the Invesco QQQ Belief.