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The tech-heavy Nasdaq Composite Index recently wrapped up the best month in nearly a decade. It reached a new record close for the first time in over two years, buoyed by optimism about artificial intelligence. The Nasdaq is the last of Wall Street's three major stock indices to reach a record-high close. For the month, the Nasdaq gained 6.1%.

Invesco QQQ (QQQ - Free Report), which serves as a proxy to the Nasdaq Index, gained 2.7% last month. As such, we have highlighted the five best-performing stocks of QQQ from last month that led the way higher in the portfolio.

These include Constellation Energy Corporation (CEG - Free Report), NVIDIA Corporation (NVDA - Free Report), GE HealthCare Technologies Inc. (GEHC - Free Report), Meta Platforms (META - Free Report), and Applied Materials (AMAT - Free Report).

Total fourth-quarter earnings of the 402 S&P 500 members who have reported results so far increased 4.9% from the prior-year period on 3.4% higher revenues. Of the companies that reported results, 78.6% beat EPS estimates and 64.4% surpassed revenue estimates. The pace of earnings and revenue growth represents an acceleration from the last couple of quarters, with the technology sector being a major contributor to this improving trend.

Investors should note that the tech sector is solely responsible for keeping Q4 earnings growth in the positive territory. The "Magnificent Seven" has been the biggest engine of growth, and its earnings are on track to be up 48.7% year-over-year on 14.5% higher revenues.

Easing inflation and an improving economy provide a nice boost to the tech sector. Per the latest data, consumer prices increased at their slowest rate in nearly three years, according to the Federal Reserve’s preferred measure of inflation. Hopes of cutting interest rates later this year have added to the strength. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for further initiatives when interest rates are low.

Further, the appeal for stocks geared toward consumer services increased, making consumer discretionary the best-performing sector last month. Now, let’s take a closer look at the fundamentals of the QQQ ETF.

QQQ in Focus

The Invesco QQQ ETF provides exposure to the 101 largest domestic and international non-financial companies listed on the Nasdaq. Information technology accounts for 50.5% of the assets, while communication services and consumer discretionary make up for a 15.6% and 13.6% share, respectively.

Invesco QQQ is one of the largest and most popular ETFs in the large-cap space, with an AUM of $252.6 billion and an average daily volume of around 40.3 million shares. Invesco QQQ charges investors 20 bps in annual fees, and it has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

Below, we have highlighted the previously mentioned stocks in the ETF with their respective positions in the fund’s basket.

Top-Performing Stocks in QQQ - Constellation Energy 

This company generates and markets electricity. It sells natural gas, renewable energy, and other energy-related products and services. The stock jumped 39% last month. It makes up 0.4% of the assets in the QQQ portfolio.

Constellation Energy has an expected earnings growth rate of 39.1% for this year and a Zacks Rank #3 (Hold). It also has a Momentum Score of A.

NVIDIA 

This company is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. The stock soared nearly 27%, and its earnings are expected to grow 79.2% in the fiscal year (ending January 2025).

NVIDIA makes up for 5.6% of the assets in QQQ, and has a Zacks Rank #1 (Strong Buy). It also has a Momentum Score of A.

GE HealthCare 

This company is one of the leading providers of medical technology, pharmaceutical diagnostics, and digital solutions with a focus on precision care. The stock makes up for 0.3% of the assets in the QQQ portfolio.

GE HealthCare gained 23% last month, and it has an expected earnings growth rate of 9.4% for this year. It also has a Zacks Rank #3 (Hold) and a Growth Score of B.

Meta Platforms 

This next one is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps, like the photo and video sharing app Instagram and the messaging app WhatsApp, due to acquisitions. The stock recently climbed 22%, and it accounts for 5% in the fund’s basket.

Meta Platforms has an expected earnings growth rate of 34.1% for this year. It also has a Zacks Rank #1 (Strong Buy) and a Momentum Score of B.

Applied Materials 

This final company is one of the world’s largest suppliers of equipment for the fabrication of semiconductors, flat panel liquid crystal displays (LCDs), and solar photovoltaic (PV) cells and modules. The stock was up 19.7% last month.

Applied Materials saw a positive earnings estimate revision of 38 cents over the past 30 days for the fiscal year (ending October 2024), and the stock accounts for a 1.2% share in QQQ. It has a Zacks Rank #2 (Buy) and a Momentum Score of B.

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