Forget Iran War: Bet Big on Tech ETFs on Earnings Strength
As the 2025 fourth-quarter earnings season nears its end, corporate profitability remains robust and is showing clear signs of improvement. The Tech sector remains a bright spot in the earnings scorecard.
Amid ongoing geopolitical risks and concerns over software demand and rising spending by the “Mag 7,” sentiment toward big tech has remained subdued. Year-to-date performance reflects this cautious outlook across the Mag 7 and the broader Tech sector. Roundhill Magnificent Seven ETF MAGS has lost about 6.5% so far this year, while State Street Technology Select Sector SPDR ETF XLK has advanced about 3.3% in the year-to-date frame.
Even with softer sentiment, the Mag 7 and broader Tech space continue to serve as the strongest profitability engines within the S&P 500. Their earnings outlook remains solid, thanks to consistent positive estimate revisions.
The Tech sector has been a major driver of overall earnings growth since the third quarter of 2023 and is expected to maintain that leadership in the first quarter of 2026, per the Zacks Earnings Trend.
S&P 500 earnings are projected to grow 11.3% year over year in Q1, but this growth rate drops sharply to 5% when the Tech sector is excluded, underscoring its importance.
The Tech sector’s strong revisions trend has helped keep overall estimate revisions in positive territory, offsetting weakness in other areas. Alongside Tech, three other sectors — Finance, Industrial Products, and Business Services — have also seen upward revisions to their Q1 2026 earnings estimates since October 2025.
ETFs in Focus
Against this backdrop, below we highlight a few technology-based exchange-traded funds (ETFs) that can be tapped now.
Vanguard Information Technology ETF VGT
The underlying MSCI US Investable Market Information Technology 25/50 Index is designed to transition in and out of securities affected by pending updates to the information technology sector. VGT charges 9 bps in fees and yields 0.42% annually. The fund is heavily weighted towardNVIDIA (17.47%), Apple (14.89%) and Microsoft (12.19%).
VanEck Semiconductor ETF SMH
The underlying MVIS US Listed Semiconductor 25 Index tracks the overall performance of companies involved in semiconductor production and equipment. The fund charges 35 bps in fees. It is heavy on NVIDIA (18.44%), Taiwan Semiconductor (10.48%) and Broadcom (7.07%).
iShares Expanded Tech-Software Sector ETF IGV