The S&P 500 Is Down But These 3 Tech ETFs Are Proving the Bull Case Isn’t Dead

Core Viewpoint - The S&P 500 is down nearly 3% year-to-date, but tech-focused ETFs have significantly outperformed the broader index over the past year, particularly those concentrated in AI technology [2][4]. Performance Analysis - The Technology Select Sector SPDR Fund (XLK) is up 33% over the past year, Vanguard Information Technology ETF (VGT) has gained 31%, and Roundhill Magnificent Seven ETF (MAGS) is also up 31%, all surpassing the S&P 500's 20% return [4][7]. - In the short term, XLK is down about 4%, VGT is similarly off, and MAGS has pulled back more than 5% over the past month, indicating that these funds have broadly tracked the market's recent decline rather than outpacing it [3][4]. Key Drivers - The primary macro factor influencing these tech funds is the trajectory of AI capital spending, with significant exposure to companies like Nvidia, Apple, and Microsoft [6][7]. - Nvidia alone represents 18% of VGT's portfolio, and the top three holdings in XLK (Nvidia, Apple, and Microsoft) account for approximately 39% of the fund [6][7]. - The performance of these funds is closely tied to the spending patterns of hyperscalers such as Amazon, Microsoft, and Alphabet, which can lead to rapid changes in fund performance based on their data center investment guidance [6][7].