Tech ETF XLK Poised for Its Longest Rally Since 2020: Here's What You Need to Know
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 09 2025
0mins
Source: NASDAQ.COM
ETF Performance: The SPDR S&P Information Technology ETF (XLK) has achieved a 10-day winning streak, gaining 3.5% last week, driven by stocks like NVIDIA and other chipmakers, rather than mega-cap tech companies like Meta and Alphabet.
Semiconductor Market Growth: The World Semiconductor Trade Statistics (WSTS) forecasts a 25% growth in the global semiconductor market for 2026, reaching $975 billion, with memory and logic sectors leading the growth.
Software Market Expansion: The global software market is projected to grow from $823.9 billion in 2025 to approximately $2.25 trillion by 2034, fueled by advancements in AI, cloud computing, and cybersecurity.
Investment Opportunities: The VanEck Semiconductor ETF (SMH) and State Street SPDR S&P Software & Services ETF (XSW) are highlighted as strong investment options, with SMH rated as a "Strong Buy" and XSW as a "Buy" according to Zacks.
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Analyst Views on META
Wall Street analysts forecast META stock price to rise
44 Analyst Rating
37 Buy
6 Hold
1 Sell
Strong Buy
Current: 600.210
Low
655.15
Averages
824.71
High
1117
Current: 600.210
Low
655.15
Averages
824.71
High
1117
About META
Meta Platforms, Inc. is building human connections, powered by artificial intelligence and immersive technologies. The Company's products enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality (VR) and mixed reality (MR) headsets, augmented reality (AR), and wearables. It also helps people discover and learn about what is going on in the world around them, enabling people to share their experiences, ideas, photos, videos, and other content with audiences ranging from their closest family members and friends to the public at large. The Company's segments include Family of Apps (FoA) and Reality Labs (RL). FoA segment includes Facebook, Instagram, Messenger, WhatsApp and Threads. RL segment includes its virtual, augmented, and mixed reality related consumer hardware, software and content. Its product offerings in VR include its Meta Quest devices, as well as software and content available through the Meta Horizon Store.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Revenue Growth: Meta's first-quarter revenue surged 33% year-over-year to $56.3 billion, showcasing the powerful impact of AI on its advertising business and reflecting the company's strengthening competitive position in the ad market.
- User Engagement Boost: AI enhancements led to a 10% increase in time spent on Instagram Reels and over 8% growth in total video time on Facebook globally, indicating increased user retention on the platform, which provides more room for ad inventory.
- Ad Performance Optimization: New ad-ranking models drove a more than 6% increase in conversion rates for a common ad format, while ad impressions rose 19% and average ad prices increased by 12%, demonstrating AI's effectiveness in enhancing advertising ROI.
- Capital Expenditure Plans: Meta expects capital expenditures to reach $125 billion to $145 billion this year, nearly double the spending in 2025, yet the company's robust cash flow and profitability enable it to support this ambitious AI infrastructure expansion.
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- Intensifying Market Competition: As the user base expands, Threads' influence in the social media space continues to grow, with Meta aiming to solidify its market position by continuously optimizing product features to counter challenges from other social platforms.
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- Nvidia's Strong Growth: Nvidia reported an 85% year-over-year revenue increase in Q1 of fiscal 2027, with net profit margins exceeding 70%, and management anticipates an 11.5% sequential growth in Q2, solidifying its position in the AI market.
- Meta Platforms Diversification: Meta Platforms saw a 33% year-over-year revenue increase in Q1, with a net profit margin nearing 50%; despite a stock decline, advancements in its AI division could significantly contribute to future revenue growth.
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- Meta's Undervalued Potential: Despite a more than 10% decline in Meta's stock price year-to-date, the company achieved a 33% year-over-year revenue growth in Q1 with nearly 50% net profit margins, indicating strong growth potential in its online advertising business, while advancements in its AI division may further enhance revenue.
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See More
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- Revenue Growth: Meta's first-quarter revenue surged 33% year-over-year to $56.3 billion, showcasing the powerful impact of AI on its advertising business and reflecting the company's strengthening competitive position in the ad market.
- User Engagement Boost: AI enhancements led to a 10% increase in time spent on Instagram Reels and over 8% growth in total video time on Facebook globally, indicating increased user retention on the platform, which provides more room for ad inventory.
- Ad Performance Optimization: New ad-ranking models drove a more than 6% increase in conversion rates for a common ad format, while ad impressions rose 19% and average ad prices increased by 12%, demonstrating AI's effectiveness in enhancing advertising ROI.
- Capital Expenditure Plans: Meta expects capital expenditures to reach $125 billion to $145 billion this year, nearly double the spending in 2025, yet the company's robust cash flow and profitability enable it to support this ambitious AI infrastructure expansion.
See More
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- Significant User Growth: Meta Platforms announced that its Threads app has reached 500 million monthly active users nearly three years after its launch, demonstrating strong competitiveness in the social media market, particularly against Elon Musk's X.
- Feature Enhancements: The introduction of new customization and community features on Threads not only improves user experience but also has the potential to attract more users, thereby further driving user growth and engagement on the platform.
- Intensifying Market Competition: As the user base expands, Threads' influence in the social media space continues to grow, with Meta aiming to solidify its market position by continuously optimizing product features to counter challenges from other social platforms.
- Strategic Implications: This growth for Meta signifies its ongoing innovation and adaptability in the social media sector, which is expected to positively impact the company's future advertising revenue and user engagement.
See More
Market Volatility and Portfolio Performance Overview
- Market Volatility Overview: The S&P 500 experienced significant volatility over the past three weeks, recording its worst session in eight months on June 5, just after reaching record highs, indicating shifts in market sentiment and investor uncertainty.
- Portfolio Performance: Among 34 stocks, 19 have risen since the May meeting, with Arm's stock soaring 38.2% driven by strong AI demand and the release of a new Nvidia chip, highlighting the potential for a rebound in tech stocks.
- Bank Stocks Recovery: Wells Fargo's shares increased by 13.9%, reflecting the financial sector's status as the best-performing group in the S&P 500, although it remains down nearly 7% year-to-date, suggesting a cautious recovery amid potential earnings volatility.
- Underperforming Stocks: Amazon's stock fell 10.8%, primarily due to concerns over AI investments, despite securing a $17.5 billion loan for AI development, raising questions about its future financial health and investor confidence.
See More
SpaceX's Historic IPO Makes Musk World's First Trillionaire
- Historic IPO: SpaceX has just completed the largest IPO in history, making Elon Musk the world's first trillionaire; however, the company remains unprofitable with a price-to-sales ratio of 130, prompting caution among investors.
- Nvidia's Strong Growth: Nvidia reported an 85% year-over-year revenue increase in Q1 of fiscal 2027, with net profit margins exceeding 70%, and management anticipates an 11.5% sequential growth in Q2, solidifying its position in the AI market.
- Meta Platforms Diversification: Meta Platforms saw a 33% year-over-year revenue increase in Q1, with a net profit margin nearing 50%; despite a stock decline, advancements in its AI division could significantly contribute to future revenue growth.
- Alphabet's Robust Performance: Alphabet achieved a 22% revenue growth in Q1, with its cloud computing segment growing 63% in sales, while operating income rose 30%, indicating strong potential in AI and autonomous driving sectors.
See More
Nvidia Continues to Lead the AI Boom
- Nvidia's Strong Performance: In the first quarter of fiscal 2027, Nvidia reported an 85% year-over-year revenue increase with net profit margins exceeding 70%, demonstrating its dominance in the AI accelerator market, and is expected to benefit from rising cloud computing demands.
- Meta's Undervalued Potential: Despite a more than 10% decline in Meta's stock price year-to-date, the company achieved a 33% year-over-year revenue growth in Q1 with nearly 50% net profit margins, indicating strong growth potential in its online advertising business, while advancements in its AI division may further enhance revenue.
- Alphabet's Diversified Growth: Alphabet experienced a 22% revenue growth in Q1, with its cloud computing segment achieving a remarkable 63% sales increase, alongside a 30% year-over-year growth in operating income, showcasing robust performance across multiple business units and potential for market share expansion.
- SpaceX Valuation Risks: Although SpaceX recently completed the largest IPO in history, turning Elon Musk into the world's first trillionaire, its price-to-sales ratio of 130 indicates significant valuation risks, prompting investors to consider its current lack of profitability cautiously.
See More
Anthropic Faces Export Control Directive Over AI Model Safety Concerns
- Government Directive Impact: Anthropic is forced to suspend access to its latest Claude models, Fable 5 and Mythos 5, due to an export control directive from the Trump administration, which could undermine its nearly $1 trillion valuation and weaken its competitive position in the AI market.
- Call for Safety Regulation: CEO Dario Amodei's recent essay advocating for stricter AI regulations emphasizes the need for technical testing and auditing of frontier AI models, highlighting the company's commitment to safety standards, yet the directive contradicts the principles of transparent oversight he supports.
- Industry Response: Following the directive, senior Anthropic executives quickly traveled to Washington to meet with government officials, demonstrating the company's proactive approach to addressing policy risks and the urgency felt within the industry regarding regulatory challenges.
- Uncertain Market Outlook: Amid ongoing clashes with the government, Anthropic and its rival OpenAI have both confidentially filed for IPOs, and while market enthusiasm for AI remains high, the uncertainty surrounding regulatory policies could impact their future fundraising and growth strategies.
See More
