ETFs that follow the tech-saturated Nasdaq 100 surged to record-time highs on Thursday, despite the U.S. imposing its broadest tariff increase in nearly 100 years.

QQQ is hovering around its all-time highs. Track live prices here.

Leading the pack were:

Invesco QQQ Trust (NASDAQ:QQQ)

Invesco NASDAQ 100 ETF (NASDAQ:QQQM)

Direxion NASDAQ 100 Equal Weighted Index Shares (NASDAQ:QQQE)

These ETFs have bucked rising geopolitical tensions and a surge in trade-related uncertainty, reflecting investor confidence in the stability of big-cap U.S. techs and the long-term prospects of AI-related innovation.

Notably, QQQ posted an 8.5% return in the past six months, besting the S&P 500’s 5.3%. Its outperformance has carried over into the second half of the year with renewed momentum sparked by a combination of fundamental and policy tailwinds.

ETFs Concentration and Composition

The Nasdaq 100 has been disproportionately influenced by a small number of dominant tech stocks. The Magnificent Seven -- Meta Platforms Inc (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOGL)(NASDAQ:GOOG), Amazon.com Inc (NASDAQ:AMZN), Apple Inc (NASDAQ:AAPL), NVIDIA Corp (NASDAQ:NVDA), Microsoft Corp (NASDAQ:MSFT) and Tesla Inc (NASDAQ:TSLA) -- together represent more than 40% of QQQ’s overall weight.

Invesco’s NASDAQ 100 ETF (NASDAQ:QQQM), with its lower cost, has traced an analogous path higher, and thus is an attractive choice for long-term, buy-and-hold investors. QQQE, meanwhile, with its equal weighting, has provided more exposure to mid-cap constituents of the index, tempering reliance on massive-cap tech.

Drivers of the Nasdaq ETF rally

• Semiconductor Exemptions Ease Trade Concerns: Though President Donald Trump’s broad tariffs now include almost 200 nations, with average effective rates set to hit 18.6%, according to the Yale Budget Lab as cited on Yahoo Finance, the administration indicated exemptions for large semiconductor companies, putting the brakes on concerns of disruption in the industry.
  
  Semiconductor stocks like Advanced Micro Devices Inc (NASDAQ:AMD) (+5.7%) and Nvidia (+0.8%) cheered, boosting ETFs with strong holdings in the companies.
  
• Apple’s $100 Billion U.S. Investment Provides Tailwind: Apple’s declaration of a $100 billion domestic manufacturing investment, including new iPhone and Watch glass manufacturing in Kentucky, further bolstered investor confidence. Since Apple holds significant weightings in Nasdaq-tracking ETFs (over 7% in QQQ), the action provided support to fund performance.
  
• AI-Centric Capex Cycle Supports Broader Tech Rally: Major U.S. cloud providers and hyperscalers, including Amazon, Meta, Alphabet and Microsoft, have significantly increased their capital expenditure to meet AI infrastructure demands. This has directly benefited hardware enablers such as Micron Technology Inc (NASDAQ:MU), Broadcom Inc (NASDAQ:AVGO), Arista Networks Inc (NYSE:ANET) and Dell Technologies Inc (NYSE:DELL), many of which feature prominently across Nasdaq ETFs.
  
  Mizuho Securities estimates a 51% YoY increase in combined data center investment by a few of these firms in 2025, according to Investors Business Daily.
  
• Growing Expectations of a Fed Rate Cut: The appointment of Stephen Miran to the Federal Reserve Board, upon Adriana Kugler’s resignation, has fueled anticipation of more dovish monetary policy. Adding to soft labor market conditions and climbing jobless claims, the CME FedWatch Tool now indicates a 89.4% chance of a 25-basis-point rate cut at the next September meeting.

Nasdaq ETFs, with their growth bias and sensitivity to duration, historically perform better in environments of declining interest rates.

Conclusion

In spite of the imposition of one of the most protectionist U.S. trade policy measures in decades, Nasdaq-tracking ETFs have surged on to new highs. The resilience is supported by selective exemption from tariffs for key industries, increasing investment in AI infrastructure, a possible shift in Fed policy and corporate efforts such as Apple’s reshoring initiative.

With AI increasingly defining the investment environment and macro conditions favoring growth stocks in turn, Nasdaq-centric ETFs look to enjoy both structural and cyclical tailwinds even in a high-tariff environment.

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Photo: Drozd Irina via Shutterstock