AI Stocks Soar, but Are You Overlooking the Market’s Hidden Gems?

Key Points in This Article:

• AI tech giants like Nvidia (NVDA) and Microsoft (MSFT) have driven market gains, but a narrow focus on these stocks may miss broader opportunities.

• While the Nasdaq 100’s 34% recovery since April is impressive,  it lags indices with more diverse exposure.

• Key sectors like healthcare, financials, and smaller tech firms, not fully captured by the Nasdaq 100, contribute to stronger market performance.

• Nvidia made early investors rich, but there is a new class of ‘Next Nvidia Stocks’ that could be even better. Click here to learn more.

AI Giants Fuel Market Surge

The stock market has soared to new heights in 2025, driven largely by technology stocks, with artificial intelligence (AI) leaders like Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) capturing the spotlight.

These mega-cap companies, central to the AI revolution, have accounted for a significant portion of the gains in major indices, propelling the Nasdaq 100 and broader market to record levels. Their dominance reflects investor enthusiasm for AI’s transformative potential, from generative models to autonomous systems.

Yet, as investors pour capital into these tech titans, they may be overlooking a broader, potentially more lucrative opportunity. The market’s recent recovery since the April 8 low following President Trump’s tariff executive orders highlights a surprising divergence, suggesting that a narrower focus on AI giants could mean missing out on significant gains elsewhere.

Capturing AI’s Big Names

Investors aiming to ride the AI wave have flocked to Nasdaq 100 ETFs, such as the Invesco QQQ Trust (NASDAQ:QQQ) and the Invesco Nasdaq 100 ETF (NASDAQ:QQQM), which track the 100 largest non-financial companies listed on the Nasdaq. These ETFs offer exposure to AI heavyweights like Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Nvidia, which dominate the index’s roughly 60% technology weighting.

Since the market bottom, the Nasdaq 100 has surged an impressive 34%, fueled by a rally after Trump’s tariff pause announcement eased concerns about supply chain disruptions. However, despite this stellar performance, the Nasdaq 100 has slightly trailed another index over the same period, hinting that a broader approach might capture additional upside.

The Nasdaq Composite, encompassing 3,300 stocks, mirrors the Nasdaq 100’s tech-heavy tilt but offers a wider lens. Including financials, healthcare, consumer staples, and smaller-cap tech firms, the Composite has achieved a 36% total return since April 8, outpacing the Nasdaq 100’s 34%.

This broader scope captures sectors less sensitive to tariff-related volatility and includes smaller, high-growth companies benefiting from the AI ecosystem. Investors seeking diversified exposure to this rally can turn to the Fidelity Nasdaq Composite Index ETF (NASDAQ:ONEQ), which is one of the few ETFs that track the index and provides access to the full range of Nasdaq-listed companies, balancing mega-cap AI leaders with emerging players across industries.

Key Contributors to the Composite’s Edge

The Nasdaq Composite’s outperformance stems from its inclusion of stocks absent from the Nasdaq 100, particularly in healthcare, financials, and smaller-cap technology.

For instance, healthcare firms like Gilead Sciences (NASDAQ:GILD) have provided stability so far this year, with GILD stock up 19% year-to-date, as their domestic focus insulated them from trade concerns. Financial stocks, excluded from the Nasdaq 100, also contributed, with smaller regional banking firms like CFSB Bancorp (NASDAQ:CFSB) running ahead of the indices only to take off once it was announced Hometown Financial Group would acquire it.

Additionally, smaller-cap tech stocks, such as semiconductor firms like Microchip Technology (NASDAQ:MCHP), drove significant gains, rising 28% so far this year, reflecting speculative enthusiasm for AI-related growth outside the mega-cap sphere. Other stocks, like beverage maker Celsius Holdings (NASDAQ:CELH) in the consumer discretionary space, further bolstered the Composite, rising 66% as it appealed to investors seeking defensive plays amid economic uncertainty.

These diverse sectors, less represented in the Nasdaq 100, enabled the Composite to capture broader market momentum.

Key Takeaways

While the Nasdaq 100’s focus on AI-driven tech giants offers substantial returns, its narrower scope misses the full spectrum of market opportunities. The Nasdaq Composite’s 36% gain since the April bottom, compared to the Nasdaq 100’s 34%, underscores the value of diversification across healthcare, financials, and smaller tech firms.

Investors fixated on mega-cap AI stocks risk overlooking resilient sectors and emerging players fueling the broader market’s rally. By investing in ETFs like ONEQ, which track the Composite, investors can capture the AI revolution’s upside while benefiting from a more balanced exposure to the market’s diverse growth drivers, ensuring they don’t miss the bigger picture.

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