As 2025 comes to a close, growth stocks are poised to outperform the market yet again. This dynamic has become commonplace over the past decade and a half, with growth stocks set to beat value stocks in 12 of the past 15 years.
With the market being led by megacap tech stocks tied to artificial intelligence (AI), there is a good chance this outperformance will continue for the foreseeable future. AI is still in its early innings, and it's just beginning to change the world in which we live. Meanwhile, the companies leading the charge are some of the biggest companies in the world.
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Unlike the dot-com bust, which was led by unprofitable companies with often times questionable business models -- we're looking at you, Pets.com -- the AI boom is being led by profitable companies with strong balance sheets that are generating an enormous amount of operating cash flow from their core businesses. This bodes well for both the companies involved and their investors.
As such, I think one of the best ways to play the AI boom is through an investment in the Invesco QQQ Trust (QQQ 0.80%), which is an exchange-traded fund (ETF) that tracks the Nasdaq-100. Investors can start with a smaller amount, say $2,000, but the key is to consistently invest in the fund in both up and down markets using a dollar-cost averaging strategy.
If you can start with $2,000 and add $1,000 each month, you would have over $268,000 after 10 years, with a 15% average annual return. The earlier you start, the better, though, as with the same rate of return, if you held for 30 years you would have nearly $5.7 million, with 94% of that coming from gains.
NASDAQ: QQQ
Key Data Points
Why the Invesco QQQ Trust is a great investment
The Invesco QQQ Trust will give you a portfolio of the top names in tech. The Nasdaq Exchange has always been where both leading and emerging tech companies have tended to list, and the Nasdaq-100 index is certainly overweight in tech stocks. Its top 10 holdings are a who's who of tech, with most of the companies being AI leaders.
Nearly 65% of the stocks in the ETF are classified as technology, and this doesn't include names like cloud computing leader Amazon and Tesla, which tend to get lumped in the consumer discretionary category. Overall, its top 10 holdings make up 55% of its portfolio.
Here is a list of its top 10 holdings and weighting, as of the end of November:
| Holding | Weighting | Holding | Weighting |
|---|---|---|---|
| Nvidia | 9.3% | Amazon | 5.1% |
| Apple | 8.7% | Tesla | 3.5% |
| Alphabet | 7.6% | Meta Platforms | 3.1% |
| Microsoft | 7.5% | Netflix | 2.2% |
| Broadcom | 6.4% | Palantir | 2.1% |
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While actively managed funds have struggled to outperform the S&P 500 over the years, the Invesco QQQ Trust has not run into that problem. As of the end of November, the ETF has had an average annual return of 19.3% versus 14.6% for the S&P 500. While that may not sound like a lot, on a cumulative basis, it is a 486.3% return versus 291.8% for the S&P 500. If you had invested $2,000 and just let it sit there, that's the difference between $11,726 and $7,836 at the end of 10 years.
One of the best things about the Invesco QQQ Trust is that not only has it outperformed the S&P 500 over the past decade, but it has done so consistently. On a 12-month rolling basis, it has topped the broader market benchmark index nearly 88% of the time. That means its gains aren't coming from just one or two big years during this stretch.
While past returns are no guarantee of future performance, the tech-heavy makeup of the Invesco QQQ trust makes it an ideal way to play the ongoing AI revolution. That's why it's one of the smartest ETFs to buy right now.
