Few ASX-listed funds have ridden the artificial-intelligence boom as directly as the Betashares Nasdaq 100 ETF (ASX: NDQ). It offers unleveraged exposure to the 100 largest non-financial companies on the US Nasdaq exchange, a benchmark dominated by the technology names powering the AI Investment cycle. After years of strong gains, investors are weighing whether the fund can keep climbing through 2026 or whether the Volatility that periodically grips high-growth technology could test its momentum.

What the ETF Does

This ETF is a passive, index-tracking fund that holds the constituents of the Nasdaq-100, an index of the largest non-financial companies listed on the Nasdaq. Its portfolio is concentrated in mega-cap technology, spanning chipmakers, software, cloud computing, internet platforms and consumer electronics, with a handful of names carrying substantial weight. The fund holds the underlying US shares directly and is unhedged, so returns for Australian investors also reflect the Australian dollar's movements against the US dollar. Unlike geared versions, it delivers one-to-one exposure to the index without borrowing, making it a straightforward way to track US large-cap technology.

Why It Is in Focus

The Nasdaq-100's biggest members are the companies most closely tied to the AI theme, from semiconductor designers to cloud and software leaders, and their Capital spending and Earnings have become a central market debate. When enthusiasm about AI runs strong, the index tends to lead global markets; when doubts surface about the pace of returns on that spending, it can fall quickly. This fund concentrates that dynamic in a single, widely held ASX line, which keeps it at the heart of discussions about whether the technology rally can persist into 2026.

What Could Drive It Next

The main drivers are the earnings and capital-spending trends of the AI-exposed mega-caps, the path of US interest rates that influences growth valuations, and the level of market volatility. Because the fund is unhedged, movements in the Australian dollar against the US dollar also shape returns for local investors, adding or subtracting from the underlying index performance. Whether the enormous investment in AI infrastructure begins to generate the profits the market anticipates will be a defining question, as will the breadth of the rally beyond the handful of names that have led it.

Risks to Watch

Concentration is the defining risk, with a small number of technology giants driving much of the index. That makes the fund sensitive to any disappointment in AI-related earnings or a broader growth-stock repricing. Rising interest rates can pressure valuations, currency swings add variability, and the sector's history shows it can experience sharp, rapid drawdowns. Regulatory scrutiny of the largest technology companies, on matters from antitrust to data and AI governance, adds another layer of uncertainty given their dominance of the index.

Closing

This ETF remains one of the most direct ASX routes into US large-cap technology and the AI theme, offering clean, unleveraged exposure to the Nasdaq-100. Its multi-year returns have been striking, but the concentration that fuelled them also raises the stakes. Whether 2026 brings another leg higher will depend on the durability of AI-driven earnings, the direction of US rates, and the market's tolerance for volatility.