Micron’s Upbeat Forecast Lifts SPMO’s Outlook

Companies across this momentum fund are signaling stronger earnings ahead.

Invesco S&P 500 Momentum ETF (SPMO) has already delivered a +36.9% return over the past year, but what its largest holdings are signaling about their own future earnings is arguably more telling. The fund is designed to mirror the investment performance of the S&P 500 Momentum Index, and when you look under the hood, the forward guidance from these companies paints a clear picture of improving fundamentals.

Where The Guidance Is Pointing

The signal is overwhelmingly positive. Across the fund’s largest positions that have recently reported, holdings making up 59.0% of the fund raised their core guidance for revenue, earnings, or cash flow. By contrast, holdings representing just 1.2% of the fund’s weight cut their outlook. The positive signal is also clear from a simple company count, as 19 of the largest holdings raised core guidance, while only 1 cut it. The message from the basket of companies you own is one of rising expectations.

Micron Leads the Charge Higher

The positive tilt is broad, but it has a clear leader. The single biggest contributor was Micron Technology (MU), which makes up 11.9% of the fund. The company raised its EPS guidance by a substantial 64.0%. Other technology heavyweights added to the momentum, including Nvidia (NVDA) at 7.5% of the fund, Broadcom (AVGO) at 6.0%, and Advanced Micro Devices (AMD) at 4.3%, all of which also raised their forward guidance. The sole counterweight among the largest holdings was Philip Morris International (PM). At just 1.2% of the fund, it lowered its EPS guidance by 12.1%, a move whose impact was dwarfed by the wave of positive revisions elsewhere.

Connecting Future Earnings To Today’s Price

So what does this forward signal mean for your investment? A fund’s price ultimately follows the earnings of the companies it holds. While SPMO’s strong past performance is backward-looking, this collective upgrade to forward guidance provides a fundamental justification for its valuation. You own a collection of businesses whose outlooks are improving. This focus on momentum-driven weighting is just one strategy for approaching the S&P 500; another popular approach involves equal weighting across the index.

The key takeaway is that the engine inside SPMO, the earnings power of its constituent companies, is revving higher. This broad-based improvement in forward guidance is the kind of fundamental tailwind that tends to precede price appreciation. While nothing is guaranteed, you currently own a basket of companies whose own forecasts are working in the fund’s favor.

So, Why Not Just Buy The Companies Raising Guidance?

Seeing this many companies inside SPMO lift their outlook, it is tempting to skip the basket entirely. If rising guidance is the signal, why not just own the companies actually raising it? We know what you are thinking, and it is an absolutely fair question.

You can, and the idea has real teeth. These are exactly the names our Guidance-Driven Momentum screen is built to surface: companies whose fresh revenue or earnings-per-share raises are already carrying their stock above both its 50-day and 200-day averages. Recent winners make the point: Host Hotels & Resorts (HST) is up 11% since it raised its EPS outlook; KLA (KLAC) is up 29% since it raised its EPS outlook; Eli Lilly (LLY) is up 29% since it raised its EPS outlook. A raise the market believes in tends to keep working.

But here is something you may not have weighed. First, timing and momentum are doing real work: a guidance raise only pays once the market agrees with management, which is exactly what a price holding above its moving averages confirms, and a raise the tape keeps shrugging off can be a value trap. Second, the companies raising guidance often cluster around the same tailwind, where a single theme like artificial intelligence can be lifting most of them at once, so a hand-picked basket of guidance-raisers can quietly become one concentrated bet.

The Fund Diversifies. Does The Rest Of Your Wealth?

A fund like this spreads risk by design – which makes it easy to forget the single stock sitting outside it that has quietly grown into a large share of your net worth. That one position is the real exposure, and selling it to diversify hands a slice of the gains to the IRS. There is a way to cap its downside and unwind it tax-efficiently.