Why Nvidia and Other AI Stocks Have Lost Their ‘Quality’ Status

Are the big AI companies giving up their status as the highest caliber stocks in the market? The question is at the heart of a debate about “quality” companies that has left two popular ETFs with wildly different performance after one ditched Nvidia and most of the rest of Big Tech.

The $48 billion iShares MSCI USA Quality Factor (ticker: QUAL) and Invesco’s $15 billion S&P 500 Quality (SPHQ) specialize in what the investment industry has dubbed quality companies. The exchange-traded funds invest only in companies that show they are safe and steady on financial measures including high profitability and low leverage.