These 3 High-Momentum ETFs Are Riding the Tech Wave

The tech sector has significantly outperformed in 2025, returning nearly 28% year-to-date and fueling speculation of an AI-driven market bubble. Investors seeking exposure to this trend can consider specialized ETFs like the First Trust Cloud Computing ETF (SKYY), which gained 35% in six months, or the Global X Artificial Intelligence & Technology ETF (AIQ), up 44% with a broader AI focus. For more diversified, low-cost exposure, the Fidelity MSCI Information Technology Index ETF (FTEC) is the largest and best-performing, rising over 45% in six months with a 0.08% expense ratio, despite significant top-holding concentration. These funds offer varying strategies, expense ratios, and levels of concentration for investors targeting the booming tech landscape.

Analysis

The technology sector has significantly outperformed in 2025, posting nearly 28% year-to-date returns against the S&P 500's 17%, driven by strong "optimistic" sentiment and fueling speculation of an AI-driven market bubble. This robust performance is reflected across specialized exchange-traded funds (ETFs) offering targeted exposure to the sector's momentum.

The First Trust Cloud Computing ETF (SKYY), with $3.3 billion in assets, gained 35% in the last six months, focusing on cloud computing but including broader tech names, which can dilute its pure-play cloud exposure. In contrast, the Global X Artificial Intelligence & Technology ETF (AIQ), with over $6.6 billion in assets, surged 44% over the same period, offering a wider AI-centric mandate across developed markets and exhibiting higher liquidity.

The Fidelity MSCI Information Technology Index ETF (FTEC) delivered the strongest performance, up over 45% in six months, boasting $17 billion in assets and a low 0.08% expense ratio. Despite its broad-based nature with nearly 300 holdings, FTEC exhibits significant concentration, with its top three positions accounting for 42% of invested assets, presenting a key risk for investors.

Key Decisions for Investors

• Investors should evaluate tech sector exposure through ETFs based on specific thematic preferences, considering SKYY for cloud, AIQ for broader AI, or FTEC for diversified tech.
• Assess the trade-off between expense ratios and portfolio concentration, noting FTEC's low cost but high top-holding weighting versus AIQ's higher expense but broader AI mandate.
• Monitor liquidity, particularly for funds like SKYY and FTEC which have lower trading volumes compared to AIQ, and be mindful of potential AI-related bubble risks impacting overall tech sector momentum.