Explore Investment Secrets: QQQ vs. NVDA — A Sharpe-Only Look (1-Year & 3-Year)

1-year: QQQ has the better risk-for-reward trade-off (higher Sharpe).
3-year: NVDA wins on efficiency per unit of risk (higher Sharpe), despite a bumpier ride.
Use it: Keep QQQ as core, add NVDA as a smaller satellite, and rebalance on bands.

The Data (assumes a 4.0% risk-free rate)

Asset	Horizon	Return (annualized)	Risk-free rate	Std-dev (annualized)	Sharpe
QQQ	1 year	23.7%	4.0%	15.5%	1.3
QQQ	3 years	32.1%	4.0%	16.8%	1.7
NVDA	1 year	46.6%	4.0%	37.5%	1.1
NVDA	3 years	146.5%	4.0%	65.7%	2.2

Sharpe = (Return − Risk-free) / Volatility, all annualized and measured over the stated windows.

Last 12 months:
QQQ is more efficient (Sharpe 1.3 vs 1.1). NVDA returned more in absolute terms, but its swings were ~2.4× larger, so you were paid less per unit of bumpiness.
Past 3 years:
NVDA dominates (Sharpe 2.2 vs 1.7). Its extraordinary compounding more than outweighed higher volatility, so each unit of risk paid more than QQQ’s.
Regime signal:
Both assets show higher Sharpe at 3Y than 1Y, hinting the broader 2023–2025 stretch was stronger than the most recent year alone.
Risk reality check:
NVDA’s volatility (37.5%/65.7%) is far higher than QQQ’s (15.5%/16.8%). Expect bigger drawdowns and wider day-to-day moves with NVDA.

Next 12 months: QQQ is more likely to post the higher Sharpe (steadier path). NVDA can beat QQQ only if returns stay exceptional and volatility cools.
Next ~3 years: NVDA can retain the Sharpe lead if AI-driven growth persists; QQQ remains stable and consistent, with a smoother Sharpe through cycles.

Core–satellite: Make QQQ your core equity sleeve; use NVDA as a smaller satellite sized to your drawdown tolerance.
Rebalance on bands: Example: target 80% QQQ / 20% NVDA; rebalance when either drifts ±20% of target (i.e., NVDA >24% or <16%).
Stay consistent: Recompute Sharpe on the same windows, with the same risk-free and return frequency so the comparison remains apples-to-apples.