What does QQQ invest in?

QQQ tracks the Nasdaq-100 Index — the 100 largest non-financial stocks listed on Nasdaq. QQQ's major holdings include Apple (largest position), Microsoft, Nvidia, Amazon, Alphabet (A and C), Meta, Broadcom, Tesla, Costco, and Qualcomm. The fund is naturally technology-heavy because Nasdaq is the preferred listing exchange for technology companies. QQQ is reconstituted annually to reflect the 100 largest non-financial Nasdaq-listed companies — automatically replacing smaller companies with larger ones as market caps change.

Has QQQ beaten the S&P 500?

Yes — QQQ has dramatically outperformed the S&P 500 (SPY) over 10, 15, and 20-year periods due to the technology sector's exceptional earnings growth. From 2010-2023, QQQ returned approximately 18-20% annually vs the S&P 500's 13-14% annually. However, QQQ also underperformed significantly in the 2000-2003 dot-com bust (Nasdaq fell 78%) and in 2022's tech selloff. The outperformance comes with higher volatility — QQQ's gains and losses are amplified vs the S&P 500.

What is the difference between XLC and QQQ?

XLC is a pure sector ETF tracking the S&P 500 Communication Services sector — holding ~20-25 communication services stocks including Google, Meta, Netflix, AT&T, and Verizon. QQQ is broader, tracking the Nasdaq-100 largest non-financial companies — holding Apple, Nvidia, and Microsoft (which aren't in XLC) alongside Alphabet and Meta (which appear in both). QQQ has no telecom stocks; XLC has AT&T and Verizon. QQQ has no entertainment stocks like Disney; XLC does. QQQ has historically outperformed XLC significantly since 2018 due to Apple and Nvidia performance.

Data as of: June 16, 2026

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XLC

Communication Services Select Sector SPDR Fund · ETF / Sector Fund

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QQQ

Invesco QQQ Trust · ETF / Nasdaq-100 Index

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Quick take

XLC vs QQQ Stock Comparison: AI Score, Valuation, Performance and Upside

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XLC and QQQ both provide significant exposure to Alphabet and Meta (both are top holdings in each ETF) but with different portfolios. QQQ is broader with more technology companies (Apple, Nvidia, Microsoft, Amazon) and no telecom stocks. XLC is narrower, concentrating on communication services including telecom (AT&T, Verizon) and streaming/entertainment that QQQ excludes. QQQ has dramatically outperformed XLC since XLC's 2018 inception due to Nvidia, Apple, and Microsoft performance.

XLC vs QQQ — XLC (the S&P 500 Communication Services sector ETF with concentrated Alphabet/Meta internet advertising exposure plus Netflix, Disney, AT&T, and Verizon in a single sector classification) versus QQQ (the Nasdaq-100 ETF with mega-cap technology concentration in Apple, Microsoft, Nvidia, Amazon, Meta, and Alphabet driving long-term technology sector outperformance of the S&P 500).

Normalized 1Y performance

XLC

QQQ

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Recent returns

XLC

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Analyst price targets & sentiment

Human Wall Street analysts' price targets, typically implying a ~12-month view — a separate signal from this site's own AI Prediction Signal further down the page, which is a 5-/30-day machine-learning forecast based on price history alone.

XLC

Price target data unavailable

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QQQ

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Who should consider this stock?

XLC may suit investors who:

want pure communication services sector exposure including internet advertising (Google, Meta), streaming (Netflix, Disney), and telecom (AT&T, Verizon) in a single low-cost sector ETF
see Alphabet and Meta's digital advertising duopoly as a specific conviction position that XLC enables within an overall portfolio
value the streaming and entertainment exposure (Netflix, Disney) in the same ETF as internet advertising — convenient single-ETF communication services positioning
are comfortable with extreme top-2 concentration (Alphabet + Meta = 45-50% of fund), telecom drag on returns, and streaming business model uncertainty affecting the entertainment names in XLC

QQQ may suit investors who:

want maximum technology sector exposure with Apple, Nvidia, Microsoft, Amazon, Meta, and Alphabet — the most dominant technology companies in one ETF
value QQQ's 20-year track record of significant S&P 500 outperformance driven by technology sector earnings growth compounding
see QQQ as a broad technology ETF rather than a narrow sector bet — the Nasdaq-100's 100 holdings provide more diversification than XLC's sector-specific portfolio
are comfortable with 0.20% expense ratio vs cheap broad market alternatives, technology concentration risk, and no financial sector exposure

Performance & AI score

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Valuation & upside potential

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Growth, profitability & risk

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Drawdown & downside risk

Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.

1Y risk snapshot

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Performance metrics by period

Performance metrics by period
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AI Prediction Signali

Members only

Next 5 trading days

XLC

+2.8%BUY

QQQ

+1.1%HOLD

Next 30 trading days

XLC

+6.4%BUY

QQQ

+3.2%HOLD

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Business comparison

Business comparison
Category	XLC	QQQ
Company	Communication Services Select Sector SPDR Fund	Invesco QQQ Trust
Sector	ETF / Sector Fund	ETF / Nasdaq-100 Index
Industry	N/A	N/A
Core business	XLC tracks the S&P 500 Communication Services sector — holding companies reclassified into communication services in 2018 including Alphabet (Google), Meta, Netflix, Disney, AT&T, Verizon, Comcast, T-Mobile, Charter, EA, Activision, and others. The communication services sector combines traditional telecom (AT&T, Verizon) with internet media/advertising (Google, Meta), streaming entertainment (Netflix, Disney), and gaming (EA, Activision/Microsoft). XLC's top two holdings (Alphabet and Meta) represent approximately 45-50% of the fund.	QQQ tracks the Nasdaq-100 Index — the 100 largest non-financial companies listed on the Nasdaq Stock Market. QQQ's holdings are heavily technology-weighted: Apple (largest holding), Microsoft, Nvidia, Amazon, Meta, Tesla, Alphabet (A and C shares), Broadcom, and other Nasdaq tech giants. QQQ benefits from the natural selection of Nasdaq listing preferences — technology and growth companies disproportionately list on Nasdaq, making QQQ inherently tech-tilted. QQQ excludes financial companies (no JPMorgan, Goldman Sachs) — the Nasdaq-100 methodology screens out financial sector names.
Investor focus	ETF investors focus on XLC's sector concentration in internet advertising, streaming, and social media vs telecom, expense ratio (0.09%), and performance relative to QQQ and broader tech ETFs.	ETF investors focus on QQQ's technology-sector tilt, expense ratio (0.20%), mega-cap technology stock performance (Apple, Nvidia, Microsoft), and long-term growth track record vs S&P 500.

XLC strengths

Direct exposure to internet advertising duopoly: Alphabet and Meta represent 45-50% of XLC — providing concentrated exposure to the world's two dominant digital advertising platforms
Entertainment and streaming diversification: Netflix, Disney, and gaming companies provide media sector exposure within XLC's communication services classification
Low expense ratio: XLC's 0.09% expense ratio provides efficient sector exposure

QQQ strengths

Mega-cap technology concentration: QQQ's top 10 holdings (Apple, Microsoft, Nvidia, Amazon, Meta, Tesla, Alphabet, Broadcom, ASML, Costco) are the world's most valuable and profitable technology companies
Long-term outperformance of S&P 500: QQQ has significantly outperformed the S&P 500 over 10-20 year periods driven by technology sector's exceptional earnings growth
Automatic reconstitution: Nasdaq-100 reconstitution process maintains quality by adding the most valuable companies and removing underperformers — portfolio quality is maintained without active management

Risks to watch — XLC

Extreme concentration in Alphabet and Meta: 45-50% in two stocks means XLC's performance largely tracks these two companies — minimal true diversification benefit despite holding 20+ stocks
Telecom drag: AT&T and Verizon provide low-growth dividend income but dilute returns from the high-growth internet businesses in the same ETF — the sector classification mix creates portfolio dilution
Streaming profitability uncertainty: Netflix and Disney streaming unit economics continue evolving — subscriber growth, advertising tier, and content investment decisions materially affect ETF performance

Risks to watch — QQQ

Higher expense ratio vs VOO/IVV: QQQ charges 0.20% vs 0.03% for broad market ETFs — the fee disadvantage compounds over decades
Extreme technology concentration: top 10 stocks represent 55-60% of QQQ — in a technology sector correction, QQQ falls much more than the S&P 500
No financial sector exposure: QQQ excludes financial companies — in cycles where banks and financial services outperform, QQQ underperforms broad market ETFs that include financials

Frequently asked questions

The Communication Services sector was created in 2018 by MSCI and S&P when they reclassified internet/media companies from the Technology sector to a new Communication Services sector. Companies moved from Technology to Communication Services include Alphabet (Google), Meta, and Netflix. Traditional telecom companies (AT&T, Verizon, T-Mobile) were already in a Telecom sector that was renamed and merged. Entertainment companies (Disney, Comcast, Charter) were reclassified from Consumer Discretionary. The result is an unusual sector mixing tech giants with cable companies and traditional telecoms.

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