QQQ vs. VTI: One Clear Winner for Building Long Term Wealth
- - QQQ vs. VTI: One Clear Winner for Building Long Term Wealth
247staffNovember 20, 2025 at 3:00 AM
0
kody_king / Shutterstock.com
In most years, especially in strong up years, the Nasdaq 100 has stood taller than the S&P 500, driven largely by the tech sector’s outsized gains. Invesco’s Q3 update shows QQQ with a NAV gain of 8.94 percent in Q3 2025, edging out the S&P 500’s 8.12 percent. Still, outperformance on the way up does not guarantee the same result going forward, particularly if tech shifts from boom to sudden slowdown.
In this piece, we will look at whether investors should lean toward the tech heavier and recently higher returning Invesco QQQ Trust (NASDAQ:QQQ), which tracks the Nasdaq 100, or the Vanguard Total Stock Market Index ETF (NYSEARCA:VTI), a broader fund that captures the entire U.S. equity market and serves as a popular alternative to the S&P 500.
This post was on October 27, 2025 to clarify the QQQ fee cut pending proposal, as well as to provide up-to-date valuation numbers.
Invesco QQQ Trust (QQQ)
There is no question that far more artificial intelligence hype is baked into the tech heavy QQQ compared with the S&P 500 or broader total market index funds. A higher valuation multiple can be justified if the massive AI related capex of mega cap tech leads to strong returns in the coming years. Even so, investors should remember that they can benefit from the AI wave through broader market exposure as well.
Many traditional companies outside the tech sector are now operating with a tech mindset. A good number have hired significant technical talent as they look to integrate AI into their operations. In many cases, these non tech firms do not yet carry an AI premium in their share prices. If their AI strategies begin to show meaningful results, they could experience multiple expansion and even outperform expectations in the near term.
At the time of writing, QQQ trades at a price to earnings ratio of about 34.6, making it roughly 30 percent more expensive than VTI. By comparison, VTI sits at a more reasonable, though still elevated, 28 times earnings. The premium baked into QQQ also exposes investors to sharper downside risk. The 2022 sell off was a clear example of how quickly high multiple tech stocks can fall. That risk grows if the market becomes less willing to pay for AI exposure, or if a powerful low cost model like DeepSeek emerges unexpectedly and disrupts the current group of AI leaders.
I still view QQQ as a strong collection of innovative companies that should thrive over the next decade as they capitalize on AI and whatever breakthrough technology follows. Quantum computing is a leading contender in that regard. Even so, I do not believe QQQ should serve as the foundation of a portfolio. It works best as a complement within a diversified and broad based investment mix.
Vanguard Total Stock Market ETF (VTI)
The Vanguard Total Stock Market ETF is likely the better choice for investors who want steady long term growth without putting themselves directly in harm’s way if an AI bubble forms and eventually bursts. DeepWater Asset Management’s Gene Munster is a committed AI bull, yet even he admits the boom will probably end in a bubble. He has suggested that a significant shakeout could arrive within two to three years.
Munster currently views 2027 as the year when many AI focused stocks could take a meaningful hit. If that scenario plays out, VTI may feel the impact far less than QQQ. The fund still has meaningful exposure to tech companies with heavy AI spending, so it would not be immune, but the shockwaves would likely be more muted given its broader and more balanced composition.
The bottom line is simple. Investors should not expect QQQ or other Nasdaq 100 based ETFs to outperform the S&P 500 indefinitely. If history rhymes and the AI frenzy ends as the internet boom once did, more cautious investors may find greater comfort in owning VTI. DeepSeek’s recent AI breakthrough only underscores the idea that tech giants will need to adapt quickly or risk losing Wall Street’s confidence.
For most investors, I believe VTI is the better choice as the core of a portfolio. It is more diversified, holding thousands of companies, and it is cheaper with a 0.03 percent expense ratio compared with 0.20 percent for QQQ. That figure for QQQ is expected to decrease to 0.18 percent pending shareholder approval in late October 2025. Even so, adding a modest slice of QQQ can make sense for younger investors who are comfortable paying a premium for added exposure to the AI theme. A practical blend might be a VTI heavy portfolio with a ten to twenty percent allocation to QQQ.
The New Report Shaking Up Retirement Plans
You may think retirement is about picking the best stocks or ETFs, but you’d be wrong. See even great investments can be a liability in retirement. The difference comes down to a simple: accumulation vs distribution. The difference is causing millions to rethink their plans.
The good news? After answering three quick questions many Americans are finding they can retire earlier than expected. If you’re thinking about retiring or know someone who is, take 5 minutes to learn more here.
Source: “AOL Money”
