Quantum computing ETFs were the hottest names in town for months, but this is no longer the case. The capital flowing into them is instead flowing into, or about to flow into, names like the First Trust Indxx NextG ETF (NASDAQ:NXTG), Invesco AI and Next Gen Software ETF (NYSEARCA:IGPT), and State Street SPDR S&P Software & Services ETF (NYSEARCA:XSW).
But why is this the case?
The simplest explanation is that investors, bulls and bears alike, are no longer falling for the hype. They’re looking at profits, growth, and have a long-term perspective. You won’t see a stock surge just because its management said “AI” dozens of times in their earnings transcripts. Investors are starting to understand the tech, and they’re scrutinizing it more.
Likewise, quantum computing surged massively, even though no one really understood it. These stocks surged explosively in late 2024 and have had little to show for it, profits-wise.
In fact, the opposite has happened. The biggest quantum computing pure-play, IonQ (NYSE:IONQ | IONQ Price Prediction) has reported a tenfold increase in net losses from 2022 (a $49 million loss) to 2025 ($510 million loss).
The following three ETFs contain companies that are seeing their profits increase, not decrease.
First Trust Indxx NextG ETF (NXTG)
NXTG tracks the Indxx 5G & NextG Thematic Index, which tracks 5G and related technologies. It isn’t limited to owning the likes of Verizon (NYSE:VZ) and owns more cutting-edge companies from various countries. It has 112 holdings with the top one being Samsung, and no holding gets a weight of over 2%.
Most regular tech ETFs are invested in well-known domestic firms, and their top holdings regularly go into the double digits. This one does not do so, and if you go down just its top 10 holdings, you likely don’t have direct exposure to most of them.
For example, the second-biggest holding is Ciena Corporation, followed by Delta Electronics. Both of those companies are still under-the-radar, but are up 696% and 486% over the past year.
The NXTG ETF itself is up 47% over the past year and has a 0.70% expense ratio.
Invesco AI and Next Gen Software ETF (IGPT)
IGPT follows the STOXX World AC NexGen Software Development Index, and Invesco says the index is made up of companies with significant exposure to technologies or products that contribute to future software development through direct revenue. This is a rather old ETF that was rebranded to fit the AI narrative, but it still works.
It is up 81.5% over the past year and is essentially a run-of-the-mill tech ETF that is focused on hardware. Nvidia (NASDAQ:NVDA) is the biggest holding at 8%, followed by Alphabet (NASDAQ:GOOG) with almost the same weight. However, when you combine all the AI hardware exposure, like from SK Hynix and several other chipmakers, over 30% of its weight is in those categories from the top 10 alone. This is why IGPT hasn’t taken a significant hit from the software selloff.
There is a catch, though. Most of its holdings have been treading water in the past few months, which is what makes me interested here. NVDA trades at just 22 times forward earnings, and the same is the case for many of IGPT’s top-tier holdings. Even though there hasn’t been a correction, tech financials have caught up and then some, and they’re undervalued relative to their growth potential.
IGPT has an expense ratio of 0.56%.
State Street SPDR S&P Software & Services ETF (XSW)
Speaking of a software selloff, this is an ETF that has fallen victim to it. But instead of ruling it out, this is an ETF you should buy into. XSW is back down to levels that were seen in late 2020 and during the 2022 selloffs. I believe a trough is close since major software companies are not reporting significant losses, and they’re instead consolidating or stabilizing.
A full recovery from here will give you 50%-plus upside. It’s just a matter of time until that happens since fear is what is driving this software cooldown.
XSW’s largest holding has a weight of just 0.99%, and you get exposure to 139 different software stocks. This is an ETF that will recover with the broader sector once the storm passes.
XSW’s expense ratio is 0.35%.
Top Gaining Stocks
Top Losing Stocks