Technology Select Sector ETF Down 0.7% YTD as AI Exposure Pressures; Nvidia Q4 EPS in Focus
YTD through Feb. 25, the Technology Select Sector SPDR Fund has lagged peers by falling 0.7% as AI-driven labor-exposed, asset-light software names underperform asset-heavy sectors. Nvidia, XLK’s third-largest holding, reports fiscal Q4 EPS expected $1.52 (71% YoY) on $65.6B revenue, with its Data Center segment contributing $58.7B.
1. Divergent Sector Performance Through Feb. 25
Through Feb. 25, the Technology Select Sector SPDR Fund has declined 0.7%, trailing capital-intensive sectors such as Energy (+19.8%), Materials (+14.98%) and Industrials (+11.3%).
2. AI-Driven Rotation Pressures Software-Heavy Names
Investors are assigning risk to firms with high labor-cost-to-revenue ratios vulnerable to AI automation. Goldman Sachs’ metric flags software, communication and professional services companies within the ETF as most exposed, driving a rotation toward asset-heavy businesses.
3. Nvidia Q4 Preview and ETF Implications
Nvidia, XLK’s third-largest holding, is set to report fiscal Q4 EPS of $1.52 on $65.6B revenue, led by $58.7B in Data Center sales. A beat-and-raise could trigger an ETF breakout above $194.50, while a miss risks a drop below $191.50.