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Written by Anthony Di Pizio for The Motley Fool->
Over 60% of the value of the Nasdaq-100 index is parked in technology stocks, resulting in significant historical returns.
After seeing some volatility earlier this year, the index now trades at a record high and looks poised for further long-term upside.
The Invesco QQQ Trust tracks the performance of the Nasdaq-100, and history suggests there is almost never a bad time to buy it.
The Nasdaq-100 index soared by 540% over the last decade, doubling the return of the S&P 500. It owes its incredible performance to its highly concentrated portfolio, with 60% of its value parked in technology stocks alone.
Companies developing enterprise software, cloud computing platforms, electric vehicles, and artificial intelligence (AI) have typically delivered better revenue and earnings growth than the rest of the market, and thus their shares have produced higher returns. Since the Nasdaq-100 exclusively holds the top 100 companies listed on the tech-heavy Nasdaq stock exchange (excluding banks and financial institutions), it has exposure to the best of the bunch.
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The Invesco QQQ Trust (NASDAQ: QQQ) is an exchange-traded fund (ETF) that tracks the performance of the Nasdaq-100 by holding the same stocks. History suggests there is rarely a bad time to invest in the ETF, so here's why it might be a great buy even with the index at a record high right now.
The Nasdaq-100 is a modified market capitalization-weighted index. That means the most valuable companies in its portfolio receive a greater representation than the least valuable, giving them more influence over its performance. However, to avoid excessive concentration, the weighting of any single company isn't allowed to exceed 24%.
This structure ensures the Nasdaq-100 benefits significantly when companies generate a significant amount of value, while keeping the downside risks in check. Nvidia stock, for example, has soared by 1,260% since the AI boom started gathering momentum at the start of 2023, and it's now the largest holding in the index (and the Invesco QQQ ETF) with a weighting of 8.4%. Below is a list of its top 10 positions.
Data source: Invesco. Portfolio weightings are accurate as of May 3, 2026, and are subject to change.
Since those companies have a combined weighting of 49.6%, they have a massive influence over the performance of the Invesco ETF. With the exception of retail giant Walmart, each one of them is operating at the forefront of the AI revolution, which could be a key source of returns for the fund in the coming years.
Wall Street thinks Nvidia could generate $370 billion in revenue during its current fiscal year (according to Yahoo! Finance), which would represent an accelerated growth rate of 71% compared to the prior year. Demand for its data center graphics processing units (GPUs), which are the premier chips for developing AI, continues to outstrip supply, and this imbalance could be even more pronounced when the company starts shipping its new Vera Rubin platform later this year.
Alphabet, Microsoft, and Amazon are three of Nvidia's biggest customers. They buy GPUs through their cloud subsidiaries, and rent the computing capacity to businesses that use it to develop and deploy AI software. They plan to spend a combined $580 billion on AI infrastructure this year alone, and the payoff could be even bigger over the long run.
The Nasdaq-100 had a volatile start to 2026, declining by as much as 12% from its record high as investors weighed the impacts of the geopolitical conflict between the U.S. and Iran. But sell-offs are a normal part of the investing journey; in fact, the index has experienced five bear markets (declines of 20% or more) since the year 2000 alone.
Each of those sharp downturns was sparked by a completely different event. There was the bursting of the dot-com internet bubble in 2000, the global financial crisis in 2008, the COVID-19 pandemic in 2020, the inflation surge in 2022, and the Trump administration's "Liberation Day" tariffs in 2025. The Nasdaq-100 made a full recovery on each occasion, just like it recently did after the onset of the onset of the U.S.-Iran war.
The Invesco QQQ ETF has actually produced a compound annual return of 10.6% since its inception in 1999, even after factoring in every single sell-off, correction, and bear market since. In other words, investors who buy the ETF with the Nasdaq-100 at a record high can still yield positive returns, as long as they maintain a long-term view.
However, there are some risks on the horizon that could trigger more volatility in the near term. Wall Street is on edge because the conflict in the Middle East might not be as close to a resolution as initially believed, so oil prices remain elevated, which could dent corporate earnings and economic growth in the coming quarters. Moreover, oil is driving inflation higher, raising the probability of a potential interest rate hike in the future.
While it's important to keep these risks in mind, they probably won't be a factor in three to five years, which is all the more reason to stay focused on the long term.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Broadcom, Meta Platforms, Micron Technology, Microsoft, Nvidia, Tesla, and Walmart. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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