First Trust Cloud Computing ETF

SKYY

Market cap $3.04B

Thematic ETFs tied to trends like artificial intelligence and quantum computing have drawn billions in new money into the market, and the portfolios have been rewarding investors with big gains. But ETF Action's Mike Akins warns that investors need to be mindful of significant risks within these newer portfolio categories, such as similarly branded AI funds, where performance differs by as much as 60% this year.

If you're interested in broad exposure to the Technology - Cloud Computing segment of the equity market, look no further than the First Trust Cloud Computing ETF (SKYY), a passively managed exchange traded fund launched on May 27, 2011.

The tech sector is among the best-performing corners of the market so far in 2025, with sector-wide returns of nearly 28% year-to-date (YTD) compared to over 17% for the overall S&P 500. In fact, the tech sector's performance—and the outsized returns of a handful of big names in particular—has been enough to prompt speculation among investors about an AI-related bubble that could be helping prop up other large chunks of the market that would otherwise be struggling.

The First Trust Cloud Computing ETF (SKYY) made its debut on 05/27/2011, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs category of the market.

After holding steady for much of 2025, the U.S. Federal Reserve finally instituted the first rate cut of 25 basis points, which could help jumpstart more mergers and acquisitions (M&A) activity. Likewise, this and further rate cuts could benefit exchange traded funds (ETFs) that provide exposure to M&A dealmaking.

The First Trust Cloud Computing ETF (SKYY) was launched on May 27, 2011, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology - Cloud Computing segment of the equity market.

First Trust Cloud Computing ETF offers a balanced cloud computing exposure, blending mega caps and growth names, making it a solid Buy within the competitive tech ETF landscape. The ETF's unique weighting methodology ensures diversification and avoids excessive concentration while still capturing key players like Amazon and Alphabet. Historical performance shows SKYY lags broader tech ETFs in downturns but is poised to benefit from future growth cycles, especially with embedded AI optionality.

I rate SKYY a hold due to its strong cloud/A.I. growth prospects but high valuations make me cautious about buying now. SKYY is well-positioned with large-cap cloud leaders and benefits from digital transformation, but its top holdings concentration adds risk. The fund outperforms peers and should deliver double-digit growth, but high multiples mean volatility and sensitivity to interest rates.

Launched on 05/27/2011, the First Trust Cloud Computing ETF (SKYY) is a smart beta exchange traded fund offering broad exposure to the Technology ETFs category of the market.

The First Trust Cloud Computing ETF (SKYY) was launched on 05/27/2011, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology - Cloud Computing segment of the equity market.