Tech ETF XLK on Its Way for Longest Rally Since 2020: Here's How

Core Viewpoint - The SPDR S&P Information Technology ETF (XLK) is experiencing a significant rally, marking its longest winning streak since September 2020, driven by chipmakers and software stocks rather than mega-cap tech companies [1][8]. Group 1: ETF Performance - XLK advanced for the 10th consecutive session on December 5, 2026, gaining 3.5% last week and outperforming the broader market [1]. - The rally is notable as it is not primarily driven by major tech companies like Meta Platforms and Alphabet, which are not included in XLK [2][3]. Group 2: Key Contributors - NVIDIA Corp, the top holding in XLK, contributed significantly with over a 4% increase last week [3]. - Other notable stocks that drove gains include SanDisk, Salesforce, Adobe, Micron Technology, and Intel, all rising more than 4% on December 5, 2025 [4]. Group 3: Semiconductor Market Outlook - The World Semiconductor Trade Statistics (WSTS) organization forecasts a growth of over 25% for the global semiconductor market in 2026, reaching $975 billion, with Memory and Logic segments expected to grow by over 30% year over year [5]. - PWC projects the semiconductor market to reach $0.6 trillion in 2024, with a compound annual growth rate (CAGR) of 8.6%, surpassing $1 trillion by 2030, driven by the growth in generative AI services [6]. Group 4: Software Market Outlook - The global software market size was $823.9 billion in 2025 and is expected to reach approximately $2,248.33 billion by 2034, with a CAGR of 11.8% from 2025 to 2034, fueled by AI integration, cloud computing, and cybersecurity demand [7]. Group 5: Investment Opportunities - The continued strength of XLK indicates that chipmakers and software stocks will be key growth engines for the tech sector in 2026, making VanEck Semiconductor ETF (SMH) and State Street SPDR S&P Software & Services ETF (XSW) attractive investment options [8].