1 Top ETF to Load Up On In May
Key Points
Tech sector earnings are expected to grow by 38% in 2026 and another 25% in 2027.
The forward price-to-earnings (P/E) ratio for the Invesco QQQ ETF has dropped to 23, offering better value to investors than it has in several years.
That combination of reasonable value and strong earnings growth makes this ETF a top pick for May.
- 10 stocks we like better than Invesco QQQ Trust ›
After being one of the worst-performing S&P 500 sectors during the first quarter of 2026, tech was up 27% in April. Just like that, it's now one of the best-performing sectors for the year as a whole and has lifted the S&P 500 and Nasdaq-100 indexes to new highs.
An easing of tensions in the Middle East has certainly helped, but so has the outlook for corporate earnings over the next few quarters. With the AI trade still in its early innings and investors appearing to be in more of a risk-on mood, one ETF stands out as a solid buy heading into May.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
Key takeaways
- FactSet projects year-over-year earnings growth of 18.6% for calendar year 2026.
- The biggest driver of future earnings growth is expected to be tech, which helps ease concerns about higher valuations.
- Tensions in the Middle East eased recently, helping amplify the tech rally.
- U.S. growth in certain areas has slowed, but near-term recession risk still appears low.
The AI earnings story is still very early
The Invesco QQQ ETF (NASDAQ: QQQ) isn't a pure tech ETF, but its 60% allocation to the sector, along with heavy concentration in the Magnificent Seven names, makes it pretty much act like one.
A lot of folks are nervous about valuations for this ETF and its components right now. That's understandable, but it's not entirely justified.
Currently, the Invesco QQQ ETF trades at a forward price-to-earnings (P/E) multiple of 23. That's actually a lot lower than it's been over the past few years. The encouraging part of this is that this number is coming down due to earnings growth, not multiple contraction.
AI development is likely to keep driving earnings growth for the foreseeable future. In 2026, S&P 500 earnings are expected to grow nearly 19% year over year, but tech earnings are forecast to grow by 38%. In 2027, earnings are expected to grow another 16% for the S&P 500 and 25% for the tech sector.
In other words, earnings are likely to keep driving share prices higher for the next several quarters, if not longer.
Why investors should buy QQQ in May
The fundamental story for this ETF is solid. Not only have valuations come down, but earnings growth is also expected to rise strongly. That combination is exactly what you want to see in an investment opportunity.
Geopolitical risks and macro factors, including labor and inflation, remain risks for the next leg of the tech rally. But the overall outlook for the Invesco QQQ ETF makes it an ETF to buy in May.
Should you buy stock in Invesco QQQ Trust right now?
Before you buy stock in Invesco QQQ Trust, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $504,832!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,223,471!*
Now, it’s worth noting Stock Advisor’s total average return is 971% — a market-crushing outperformance compared to 202% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 1, 2026.
David Dierking has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Recommended Articles
