Summary

• Invesco S&P SmallCap Information Technology ETF (PSCT) has beat XLK by 9% since January 2026, driven mainly by semiconductor stocks.
• Fundamentally, these gains make sense. Earnings growth acceleration, as measured by industry-level historical and expected growth rates, are huge for semiconductors.
• However, PSCT's high exposure to slower-growing and slower-accelerating software and services stocks hurts returns and risk-adjusted returns. More efficient choices are XSD and PSI.
• Long-term shareholders should also consider the large-cap segment through XLK, given its substantially better quality and long-term performance.

Investment Thesis

I last reviewed the Invesco S&P SmallCap Information Technology ETF (PSCT) on January 16, 2026, when I upgraded it from a "sell" to a "hold" due to a "positive directional change in earnings growth" and positive sentiment. In retrospect, I wish

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.