For long-term investors, the key question is not just whether earnings improve, but how much of that improvement is already concentrated in a handful of sectors. QQQ and QQQM track the Nasdaq-100, so their earnings profile is shaped by a relatively narrow set of large-cap growth companies rather than the full market. That makes quarter-to-quarter profit trends in technology and communication services especially important to the fundsโ behaviour.
This also means โgood earningsโ can matter even when the ETFs do not hold the S&P 500 directly. When the same mega-cap names influence both benchmarks, guidance from major index constituents can ripple through performance expectations for Nasdaq-100 funds. For allocators, the practical takeaway is that these ETFs are not generic equity exposure; they are a deliberate bet on index leadership led by a concentrated slice of corporate America.
That concentration cuts both ways. Strong results can reinforce momentum, but softer guidance can quickly expose how dependent the portfolio is on a few dominant industries. Investors using QQQ or QQQM as core holdings should therefore think about overlap with other U.S. equity funds, because adding multiple growth-heavy funds may unintentionally duplicate the same earnings drivers.
In portfolio terms, these ETFs are best judged as building blocks with a specific role:
- Useful when an investor wants systematic exposure to large-cap growth leadership
- Less useful as a stand-in for broad-market diversification
- Most effective when paired with holdings that offset sector and style concentration
For ETF investors, the important issue is not whether earnings season is strong in isolation, but whether the resulting concentration fits the role these funds are meant to play inside an overall allocation.
S&P 500 Earnings Trend Could Lift QQQ
Should current forecasts be met or exceeded, earnings season could potentially support QQQ and QQQM. FactSetโs John Butters recently noted the S&P 500 is expected to post Q4 EPS growth of 11.7%.That would be the best year-over-year increase since the final quarter of 2021. In what could be good news for growth stocks and ETFs like QQQ and QQQM, Butters pointed out that earnings improvement trends late last year indicate the S&P 500 could actually post YoY EPS growth of 14% for the October through December period. There is some precedent for such a surprise. โIn fact, the actual earnings growth rate has exceeded the estimated earnings growth rate at the end of the quarter in 37 of the past 40 quarters for the S&P 500. The only exceptions were Q1 2020, Q3 2022, and Q4 2022,โ he said. Importantly, thereโs also a recent track record of S&P 500 member firms, including those residing in QQQ and QQQM, beating EPS forecasts. โOver the past four quarters (Q4 2023 through Q3 2024), actual earnings reported by S&P 500 companies have exceeded estimated earnings by 4.9% on average. During these four quarters, 77% of companies in the S&P 500 reported actual EPS above the mean EPS estimate on average,โ added Butters. As earnings plays, QQQ and QQQM matter. Thatโs because much of the S&P 500โs recent earnings ebullience is attributable to the technology and communication services sectors. Those two sectors combine for two-thirds of the Invesco ETFsโ portfolios.https://www.etftrends.com/etf-education-channel/earnings-growth-could-power-etfs/Enjoyed this article? Sign up for our newsletter to receive regular insights and stay connected.