Evercore’s Bullish Outlook for QQQ and SMH
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Evercore ISI has set an ambitious price target of $570 for QQQ, representing a 16.3% increase from its current level of $490 as of October 15. The QQQ ETF, which tracks the Nasdaq 100, has already surged nearly 20% this year. Evercore’s technical analysis describes the ETF as having a “UniQQQuely bullish ‘failed’ head and shoulders” pattern, suggesting more upward momentum.
The VanEck Semiconductor ETF (SMH), which has soared 41.3% this year, is also seen as having further room to grow. Evercore has set a target price of $300 for SMH, a potential 17.7% rise from its current price of $247. The SMH ETF is trading well above key technical indicators, including its 50-day, 100-day, and 200-day moving averages, signaling a strong bullish trend that could continue in both the short and long term.
Evercore’s use of the phrase “Buy Moore” alludes to Moore’s Law, a principle that has guided the semiconductor industry for decades. While Nvidia’s CEO Jensen Huang has argued that Moore’s Law is no longer as relevant today due to the slowing pace of advancements in transistor density, the chip industry continues to see explosive growth.
Nvidia’s Pivotal Role in Nasdaq 100 Growth
Nvidia (NVDA) has been a major driver of returns for both QQQ and SMH. In fact, Nvidia is the largest holding in SMH, making up 20.9% of its portfolio, and the second-largest in QQQ with an 8.32% allocation.
Nvidia’s recent success has been largely driven by the demand for its AI-oriented graphics processing units (GPUs). The company’s latest earnings report in August showcased record revenue of $30.04 billion, surpassing Wall Street estimates, while its data-center segment sales grew a staggering 154% year-over-year.
Nvidia’s future prospects look equally bright, with the company set to ship its highly anticipated Blackwell GPUs in Q4. Blackwell is a cutting-edge platform designed for real-time generative AI, enabling organizations to run models with trillions of parameters. Nvidia expects several billion dollars in Blackwell revenue in the fourth quarter alone, reinforcing its dominant position in the AI sector.
Evercore ISI continues to see Nvidia as a key player in the tech space, with a price target of $200 per share.
Other Key Holdings Boosting QQQ and SMH
Beyond Nvidia, other major holdings in QQQ and SMH have also performed exceptionally well this year. QQQ’s largest holding, Apple (AAPL), makes up 8.7% of the ETF’s portfolio and has risen 21% year-to-date. Apple shares hit an all-time high of $237.49 on October 15, following the announcement of its new iPad Mini, which will include AI features.
In the SMH ETF, Taiwan Semiconductor (TSM), Nvidia’s largest supplier, is the second-largest holding. TSM has seen an impressive 80% stock price increase this year. As the company gears up to release its third-quarter earnings report on October 17, investors are eagerly awaiting updates on its outlook.
Conclusion
Evercore ISI’s bullish predictions for the tech sector, particularly regarding QQQ and SMH, reflect the growing strength of the industry.
With Nvidia at the forefront of AI innovation and key companies like Apple and Taiwan Semiconductor performing well, the tech rally seems poised to continue.
Investors will be watching closely as these ETFs, buoyed by strong earnings and technological advancements, aim for even higher gains in the months ahead.