Tech ETF XLK on Its Way for Longest Rally Since 2020: Here's How

The Technology Select Sector SPDR ETF (XLK) extended its rally to a 10th straight session on Dec. 5, 2026—its longest streak since September 2020—gaining 3.5% for the week as leadership came from chipmakers and software names rather than mega-cap communications names; NVIDIA, SanDisk, Salesforce, Adobe, Micron and Intel were notable contributors. Supporting the sector move, industry forecasters see continued strength: WSTS forecasts global semiconductor market growth of more than 25% in 2026 to $975 billion with memory and logic rising over 30% year‑over‑year, while broader semiconductor and software growth projections (and AI-driven server/network demand) underpin multi‑year upside. The breadth toward semiconductors and software reinforces the case for targeted exposure (Zacks highlights VanEck’s SMH and State Street’s XSW as potential plays, ranked #1 and #2 respectively).

Analysis

The Technology Select Sector SPDR ETF (XLK) extended its rally to a 10th straight session on Dec. 5, 2026, marking its longest winning streak since September 2020 and delivering a 3.5% gain for the week. The move is atypical because mega-cap communications names were not the primary drivers: Meta rose 5.4% and Alphabet 1.1% last week but are not in XLK, while NVIDIA — XLK’s largest holding — gained over 4% and materially contributed to the fund’s advance.

Leadership rotated to chipmakers and software names, with SanDisk, Salesforce, Adobe, Micron and Intel cited as more-than-4% movers on Dec. 5 (per the article) and weekly leaders including Microchip, NXP, AppLovin and Synopsys. Industry forecasts support this rotation: WSTS projects global semiconductor market growth of more than 25% in 2026 to $975 billion (memory and logic up >30% YoY), PwC and WSTS highlight server/network strength from generative AI, and software is modeled to expand from $823.9 billion in 2025 toward ~$2.25 trillion by 2034 at an 11.8% CAGR.

The combination of positive industry fundamentals and broadened ETF breadth underpins Zacks’ callouts of SMH (Zacks Rank #1) and XSW (Zacks Rank #2) as targeted plays, but the rally’s concentration in key holdings like NVIDIA implies ongoing monitoring of leadership and semiconductor-cycle indicators is prudent.

Key Decisions for Investors

• Increase selective exposure to semiconductors via SMH or high-quality chip names given WSTS's >25% 2026 growth forecast and recent outperformance by chipmakers
• Allocate targeted software exposure through XSW or carefully chosen software equities because the sector shows durable multi‑year CAGR support from AI and cloud trends
• Manage position sizes and consider hedges to limit concentration risk from NVDA-driven rallies, and monitor WSTS updates and memory/logic sector data for signs the cycle is broadening or rolling over