Is It Really "Safe" to Invest in Tech ETFs Right Now? Here's What History Suggests.
2026-10-15 18:00
•Ben Gran •The Motley Fool
••••• ••••••••••• Axe Cap view
Tech ETFs: Safe Haven or Risky Bet Amid the AI Boom?
Tech stocks show strong earnings but remain volatile, making timing and exposure crucial for investors.
Tech ETFs like the Invesco Nasdaq 100 (QQQM) have delivered impressive returns of around 16% annually over five years, driven by AI-related growth in giants like Nvidia, Google, and Microsoft. These companies aren't just riding hype—they're reinvesting huge sums into AI infrastructure, underpinning solid earnings growth. However, this doesn't erase tech’s cyclical nature. In 2022, the sector dropped over 30%, reminding investors that valuation bubbles can burst. For South African investors, the USD/ZAR exchange rate adds another layer. A rand weakening would reduce your local returns on US-listed tech assets and ETFs. On the flip side, a stronger rand might cap gains. Given the global dominance of these firms, local alternatives like Naspers and Prosus offer some exposure but with different risk/reward profiles due to their diversified holdings. I’m wary of jumping in aggressively but wouldn’t avoid tech ETFs entirely. Watch the FX direction closely and be ready for short-term swings. this is just our opinion and not financial advice
Start with a modest position in QQQM to capture diversified tech exposure, but keep stops tight. Complement this with selective exposure to Naspers and Prosus for local flavor. Avoid heavy leverage given sector volatility and rand swing risks.
- QQQM
- USD/ZAR
- Naspers
- Prosus
- Tech sector correction beyond earnings growth
- Rand depreciation eroding USD returns
6/10
The article examines whether tech stocks are overpriced amid the AI boom. While tech valuations appear reasonable due to strong earnings growth outpacing share price increases, the sector remains volatile. The Invesco Nasdaq 100 ETF offers diversified tech exposure with 16.4% annualized returns over five years, though investors should be prepared for potential downturns like the 32.45% decline in 2022.
Our take is based on reporting first published by The Motley Fool.