Sector Analysis2025-11-03
Tech Rally Resumes: QQQ and SOXX Lead Semiconductor Surge
A recovery in AI demand and a rebound in memory chip prices drove strong gains in the tech sector, with QQQ rising +4.1% for the week and the SOXX semiconductor ETF surging +6.8%. Strong results from Nvidia and AMD lifted the entire sector, underscoring the need to optimize tech stock allocations using an asset allocation calculator.
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In the first week of November 2025, tech stocks staged a powerful rebound, with the Nasdaq index outperforming the S&P 500 by a wide margin — gaining +4.2% for the week versus the S&P 500's +2.8%. Nvidia jumped +8.5% after announcing increased shipments of its next-generation B200 AI chip; AMD rose +7.2% after raising its data center revenue guidance; and Micron surged +9.1% on a spike in HBM (High Bandwidth Memory) orders. As a result, QQQ (Invesco Nasdaq-100 ETF) climbed +4.1% for the week, bringing its year-to-date return to +28%, while SOXX (iShares Semiconductor ETF) surged +6.8%, reaching a year-to-date return of +42% — ranking first among all sector ETFs. The leveraged ETF TQQQ (Nasdaq-100 3x Leveraged) skyrocketed +12.5% for the week, delivering substantial gains for high-risk investors, though volatility also tripled. With tech stock weightings having risen sharply, investors whose portfolios may be out of balance should use a rebalancing calculator to check for drift from their target allocations, and an asset allocation calculator to optimize how much exposure to QQQ, SOXX, and TQQQ fits their individual risk tolerance.
AI Semiconductor Demand Recovery and Sector Outlook
The primary driver of the tech rally is explosive growth in AI semiconductor demand. Nvidia CEO Jensen Huang indicated that orders for the B200 chip are exceeding production capacity, with supply shortages expected to persist through Q1 2026. The B200 is priced at $30,000–$40,000 per unit — roughly 50% higher than the previous H100 ($25,000) — yet delivers 2.5x the AI computing performance, making it highly cost-efficient. Big Tech companies including Microsoft, Meta, and Google plan to increase AI infrastructure investment by +40% year-over-year in 2026. Training OpenAI's GPT-5 alone requires more than 100,000 H100 chips, illustrating how advances in AI models continue to fuel semiconductor demand. Memory chip prices are also rebounding: DDR5 DRAM prices rose +8% quarter-over-quarter, recovering 60% from their 2023 lows. Demand for HBM3E (next-generation high bandwidth memory) is surging, with Samsung and SK Hynix planning to double production capacity by 2026. NAND flash prices also rose +5% quarter-over-quarter, improving profitability for memory makers. The recovery is extending to equipment makers: ASML saw EUV equipment orders rise +25% quarter-over-quarter, and Applied Materials reported +18% growth in equipment revenues driven by expanded AI chip production. For 2026, the global semiconductor market is projected to grow +12% year-over-year, led by AI and data centers, with PC and smartphone demand also recovering and memory conditions expected to remain favorable through at least the first half of 2026. However, valuation risk remains: SOXX trades at a P/E of 35x versus its historical average of 28x — a 25% premium — creating exposure to near-term corrections. Geopolitical risks, including China's push for semiconductor self-sufficiency and the ongoing U.S.-China tech dispute, remain long-term variables. Investors should consider taking partial profits when the sector becomes overheated and use a rebalancing calculator to adjust allocations — for instance, selling any excess when QQQ or SOXX weightings exceed a target by more than +10 percentage points.
QQQ Nasdaq-100 ETF: Core Strategy
QQQ (Invesco Nasdaq-100 ETF) invests in the 100 largest non-financial companies listed on the Nasdaq by market cap, making it the flagship tech-growth ETF. Top holdings include Apple at 12%, Microsoft at 10%, Nvidia at 8%, Amazon at 6%, and Meta at 5%, with Big Tech accounting for over 40% of the fund. Sector weights are approximately 52% technology, 18% communication services, 15% consumer discretionary, and 8% healthcare — reflecting a high concentration in tech. The fund trades at an average P/E of 33x, a 57% premium to the S&P 500 (21x), but the underlying companies also deliver more than twice the earnings growth, making it well suited for growth-oriented investors. With an expense ratio of 0.20%, QQQ is a low-cost option, and as of year-to-date 2025, it has returned +28% — outperforming SPY (S&P 500 ETF, +22%) by +6 percentage points. The key advantage of QQQ is its exposure to tech-driven growth: the average revenue growth rate for Nasdaq-100 companies is +12%, double the S&P 500's +6%, with leading positions in AI, cloud computing, and electric vehicles. While valuations are elevated, they are supported by strong earnings: from 2020 to 2025, QQQ delivered an annualized return of +18%, significantly outpacing SPY's +12%. Diversification across 100 holdings reduces individual company risk, and ongoing index composition updates — such as the addition of Tesla and Nvidia — continuously optimize the portfolio. On the risk side, QQQ's P/E of 33x versus its historical average of 28x creates near-term correction risk, and rising interest rates tend to increase valuation pressure on growth stocks. Sector concentration is also a concern: a 52% weight in technology means the entire portfolio is exposed to tech selloffs, and the top 5 holdings accounting for 40%+ introduces some single-stock risk. During recessions, growth stocks tend to underperform value stocks more sharply, which could make QQQ losses larger than those of SPY. In terms of strategy, a 30–50% QQQ weighting as the core growth engine is a common approach: an aggressive portfolio (40s age group) might allocate QQQ 50% + SPY 20%, while a balanced portfolio (50s age group) might use QQQ 30% + SPY 30%. A 60/40 split of QQQ and SPY balances tech growth with traditional sectors. Investors can use a rebalancing calculator to set a QQQ target (e.g., 40%) and shift excess weight into bonds or SPY when it rises above 45%. An asset allocation calculator can simulate the long-term return and volatility of 30%, 40%, and 50% QQQ allocations to help identify the right weighting for each investor's risk tolerance.
SOXX Semiconductor ETF: Concentrated Exposure
SOXX (iShares Semiconductor ETF) provides concentrated exposure to 30 companies across the semiconductor design, manufacturing, and equipment value chain. Top holdings include Nvidia at 22%, Broadcom at 8%, AMD at 7%, Intel at 6%, and Qualcomm at 5%, covering the full semiconductor ecosystem. Subsector breakdown includes GPU/AI chips (Nvidia, AMD) at 29%, memory (Micron) at 4%, foundry (TSMC) at 6%, equipment (ASML, Applied Materials) at 12%, and communications chips (Qualcomm, Broadcom) at 13%. The fund trades at an average P/E of 35x — a slight premium to the Nasdaq-100's 33x — but revenue growth of +18% exceeds the Nasdaq-100's +12%. At an expense ratio of 0.35%, SOXX is more expensive than QQQ (0.20%), but the premium is justified by its concentrated semiconductor focus. Year-to-date in 2025, SOXX has surged +42%, outperforming QQQ (+28%) by +14 percentage points and ranking first among all sector ETFs. SOXX's main advantage is its ability to maximize AI exposure: with Nvidia and AMD combining for 29% of the portfolio, the fund directly captures AI semiconductor growth, while the inclusion of memory and equipment companies ensures broad participation in any sector recovery. During semiconductor up-cycles, SOXX has historically delivered 1.5x to 2x the excess returns of the Nasdaq-100. Demand from AI, data centers, automotive, and IoT is recovering simultaneously, and TSMC and Samsung are seeing sharp increases in foundry orders. The long-term return potential is significant: from 2023 to 2025, SOXX gained +110%, far outpacing QQQ's +68%, and earnings growth continues to justify elevated valuations. On the risk side, SOXX's annualized volatility of 35% is 1.4x that of the Nasdaq-100 (25%), meaning short-term drawdowns are more severe. In 2022, SOXX fell -45% during the semiconductor downturn, worse than the Nasdaq-100's -33%. Concentration risk is high: a single sector means the entire fund is impacted when the cycle turns down, and Nvidia's 22% weighting means a poor quarterly result from Nvidia alone could trigger a sharp decline in SOXX. Geopolitical risks — the U.S.-China tech conflict and Taiwan (TSMC) risk — affect the entire sector. A suitable strategy is to limit SOXX to 10–20% of the portfolio to avoid excessive concentration. The current phase (2025–2026) of an early semiconductor upcycle is a favorable entry point. A SOXX allocation alongside QQQ — such as QQQ 70% + SOXX 30% — combines broad tech exposure with semiconductor focus. Investors should trim SOXX when it rises more than +5 percentage points above target and cut the position in half when valuations reach bubble territory (P/E above 40x). A rebalancing calculator can help set a SOXX target (e.g., 15%) and redirect any excess above 20% into QQQ or SPY, while an asset allocation calculator can compare scenarios of 10%, 15%, and 20% SOXX allocations to find the right level of semiconductor exposure.
TQQQ Leveraged ETF Strategy and Risk Management
TQQQ (ProShares UltraPro QQQ) seeks to deliver 3x the daily return of the Nasdaq-100. When QQQ rises 1%, TQQQ gains approximately 3%; when QQQ falls 1%, TQQQ loses approximately 3%. Daily rebalancing resets the 3x leverage each day, which means that over longer holding periods, compounding effects and volatility decay occur simultaneously. The expense ratio is 0.86% — more than four times that of QQQ (0.20%). Year-to-date in 2025, TQQQ has surged +95%, delivering approximately 3.4x the return of QQQ (+28%), though with 3x the volatility as well. The primary appeal of TQQQ is short-term return amplification: during Nasdaq-100 uptrends, the 3x leverage can generate extreme gains. From 2023 to 2025, TQQQ surged +250%, far surpassing QQQ's +68%. During sustained uptrends, the daily rebalancing compounding can even exceed the theoretical 3x multiple — for example, if QQQ rises +2% for five consecutive days, QQQ would gain about +10.4% while TQQQ would gain approximately +31.2% (exceeding the theoretical 30%), capturing a compounding premium. TQQQ also provides leveraged exposure with a smaller capital outlay: a $100,000 TQQQ position offers similar market exposure to a $300,000 QQQ position, making it useful for short-term tactical allocations. On the downside, losses are equally amplified: a -10% decline in QQQ results in roughly a -30% drop in TQQQ. In 2022, when QQQ fell -33%, TQQQ collapsed -80%, nearly wiping out the investment entirely. Volatility decay (also known as beta slippage) means that in choppy markets, daily fluctuations compound in a way that erodes long-term returns below the theoretical 3x level. For example, if QQQ alternates between +5% and -5%, QQQ essentially goes nowhere, but TQQQ suffers a cumulative loss of approximately -0.75%. High costs add further drag: the 0.86% expense ratio combined with leverage maintenance costs (equivalent to financing costs) adds another 1–1.5% annually, bringing the total cost burden above 2% per year. Long-term holding is also problematic: daily rebalancing means that over extended holding periods, volatility decay and costs accumulate, and actual long-term returns may fall short of the theoretical 3x multiple. Holding TQQQ for more than five years may actually produce lower risk-adjusted returns than QQQ. The recommended strategy is to cap TQQQ at 3–5% of the overall portfolio to keep potential losses manageable. It should only be held during clear short-term uptrends (3–6 months), entered on technical breakout signals (e.g., moving average crossovers), and exited immediately when downside signals emerge. Strict stop-loss rules are essential: sell unconditionally at a -10% loss to prevent further damage, and take partial profits at +30% gains. TQQQ should never be held in sideways or declining markets — instead, shift to cash or back to QQQ. Because daily swings of ±10% are common, only investors who can tolerate extreme psychological pressure should approach TQQQ, and only with discretionary funds (no more than 5% of total assets) — never with living expenses or emergency savings. In portfolio management, rather than setting a target percentage weight for TQQQ, it is more practical to set an absolute dollar limit (e.g., no more than $50,000). Since TQQQ's extreme volatility makes asset allocation simulations unreliable, it is best managed as a separate trading allocation, distinct from the core investment portfolio.
Building a Tech Portfolio and Rebalancing
The appropriate allocation to tech stocks should vary based on age and risk tolerance. A suggested framework by age group: investors in their 40s (aggressive) might allocate 50% to tech, with QQQ at 35%, SOXX at 12%, and TQQQ at 3%, prioritizing growth; investors in their 50s (balanced) might allocate 30% to tech, with QQQ at 22%, SOXX at 7%, and TQQQ at 1%, balancing growth and stability; investors in their 60s (conservative) might limit tech to 15%, with QQQ at 12%, additional weight in SPY, and no TQQQ exposure, prioritizing capital preservation. For the balance between tech and traditional sectors: a QQQ 60% + SPY 40% combination is tech-centric but uses traditional sector exposure to moderate volatility; a QQQ 40% + SPY 40% + SOXX 20% combination diversifies risk across broad tech, traditional industries, and semiconductors; and a QQQ 30% + SPY 50% + bonds 20% combination is designed for conservative investors seeking a blend of growth and stability. For rebalancing, a quarterly review approach triggers rebalancing when a tech allocation drifts more than ±10 percentage points from its target — for example, if QQQ's target is 35% and it surges to 45%, sell the 10-point excess and reallocate to bonds or SPY. A band approach maintains allocations within ±15% of the target (e.g., a 40% target becomes a 34%–46% band), triggering rebalancing immediately if the band is breached. For profit-taking, consider selling half a position when an individual ETF gains more than +30% within six months. For SOXX and TQQQ — given their higher volatility — full liquidation may be appropriate at +50%, waiting for a re-entry opportunity. Rebalancing naturally enforces a discipline of selling near highs and buying near lows. For handling sharp declines: if the Nasdaq-100 drops more than -10% within a week, consider adding to QQQ at a discounted price; if SOXX falls more than -15%, a small add-on may be appropriate, as long as the total weight stays within the upper limit of the target range; for TQQQ, do not average down — apply stop-loss rules strictly. To illustrate with a concrete rebalancing example: starting with a KRW 100 million portfolio (QQQ KRW 35M / 35%, SPY KRW 30M / 30%, SOXX KRW 12M / 12%, bonds KRW 20M / 20%, TQQQ KRW 3M / 3%), after three months with QQQ +10%, SPY +5%, SOXX +20%, bonds +2%, TQQQ +30%, the portfolio grows to approximately KRW 110.85M (QQQ KRW 38.5M / 34.7%, SPY KRW 31.5M / 28.4%, SOXX KRW 14.4M / 13.0%, bonds KRW 20.4M / 18.4%, TQQQ KRW 3.9M / 3.5%). Since all assets remain within ±10 percentage points of their targets, no rebalancing is needed. Six months in, with QQQ +25%, SPY +12%, SOXX +45%, bonds +4%, and TQQQ +80%, the portfolio reaches approximately KRW 125.38M (QQQ KRW 43.75M / 34.9%, SPY KRW 33.6M / 26.8%, SOXX KRW 17.4M / 13.9%, bonds KRW 20.8M / 16.6%, TQQQ KRW 5.4M / 4.3%). SOXX and TQQQ have surged, but remain within the ±10 point band — technically no rebalancing is required. However, TQQQ has gained +80%, triggering the profit-taking rule (full exit at +50% gains): sell the entire TQQQ position for KRW 5.4M and reallocate to bonds or QQQ. Using a rebalancing calculator, investors can set overall tech targets (e.g., 50%) and sub-targets (QQQ 35%, SOXX 12%, TQQQ 3%), run quarterly drift checks, and use an asset allocation calculator to simulate how long-term returns and volatility differ across 30%, 40%, and 50% tech allocations — helping identify the optimal tech weighting and rebalancing strategy for each individual investor.
Conclusion
The recovery in AI semiconductor demand is a core driver of long-term growth in tech stocks. QQQ serves well as a 30–50% core growth position, capturing the broad gains of the Nasdaq-100. SOXX, at a 10–20% allocation, can maximize participation in semiconductor up-cycles. TQQQ, capped at 3–5%, offers short-term return potential but requires strict risk discipline. When tech weightings surge well beyond targets, use a rebalancing calculator to take profits and restore balance. Simulate the long-term performance of QQQ, SOXX, and TQQQ combinations using an asset allocation calculator to build the tech portfolio best suited to your risk tolerance.
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