Is It a Good Idea to Purchase the Invesco QQQ ETF Now That the Nasdaq Is Approaching a Record High? Here’s What Past Trends Indicate.

The Nasdaq-100 is an index that includes the 100 biggest publicly traded non-financial firms on the Nasdaq exchange. It’s heavily weighted towards tech companies, with over 60% of its value coming from this sector.

Last year, the Nasdaq 100 saw a 20.2% return, surpassing more diversified indices. The S&P500 only rose 16.4%, largely thanks to strong performers like Nvidia, Alphabet, and Palantir Technologies. Though 2026 has started off a bit more unpredictably, the index is currently just 3.7% shy of its all-time peak.

The Invesco QQQ Trust (QQQ 2.04%) is an ETF that mirrors the performance of the Nasdaq 100 by holding similar stocks and proportions. But, is now really the best time to dive in? History offers some guidance.

Key factors for achieving consistent long-term growth

Emerging sectors like artificial intelligence (AI), cloud computing, robotics, quantum computing, and autonomous vehicles have propelled market gains in recent years. ETFs and indices heavily invested in these areas generally outperform their more traditional counterparts.

Right now, AI is capturing a lot of investor interest, generating considerable value—potentially trillions of dollars—for numerous U.S. companies. Below are five AI leaders and their respective weightings in the Invesco QQQ ETF and the S&P 500 Index.

These five stocks have collectively returned an impressive average of 880% since early 2023, when the AI boom truly took off. This illustrates why the Nasdaq 100, along with the Invesco ETF, has outperformed the S&P 500. While both indices include these stocks, their respective weightings create a noticeable difference in returns.

Although those five stocks are promising, there are other Nasdaq 100 entities worth considering for future growth.

• Tesla (TSLA 2.66%): Certainly, this stock is currently on the pricey side. However, if Tesla successfully transitions from electric vehicle production to dominating the humanoid robot market, that could spell significant long-term benefits for investors.
• Micron Technology (MU +0.77%): This company offers essential high-bandwidth memory solutions for data centers, particularly for Nvidia’s latest AI chips. Micron stands to benefit greatly from the ongoing infrastructure developments in AI and is currently more reasonably priced than many competitors.
• CrowdStrike (CRWD 1.05%): With data being crucial for AI software, protecting that data will grow increasingly important for businesses. CrowdStrike offers comprehensive protection for enterprises via its Falcon platform, which is likely to see high demand as AI usage expands.

Investing in the Nasdaq 100 for the long term is generally wise

Predicting market movements with absolute accuracy is virtually impossible. However, looking back, the Invesco QQQ ETF has historically provided an average annual return of 10.4% since it started in 1999, boasting a faster 20.5% annual return over the past decade.

These returns clarify why there have been sell-offs, corrections, and bear markets in the Nasdaq 100 along the way. In fact, since the Invesco ETF launched 26 years ago, there have been five instances where the index suffered losses exceeding 20% from peak to trough, often triggered by major events like the 2000 dot-com crash, the 2008 financial downturn, and the pandemic in 2020.

So, while it might feel counterintuitive to invest in stocks during a market decline, history suggests that this could actually be a prime opportunity to buy. Investors who purchased the Invesco QQQ ETF during its peaks since 1999 ended up profiting by holding onto their investments long-term, even if they bought when the index dipped immediately afterward.

For those with a long-term perspective—at least five years—this might actually be a reasonable time to consider buying into the Invesco QQQ ETF, even as the Nasdaq 100 approaches new record highs.