QQQI: Pioneering High-Yield Exposure to AI-Driven Growth Through the Magnificent 7

The rapid ascent of artificial intelligence (AI) has redefined the investment landscape, with generative AI spending projected to surge 76% in 2025, reaching $643.9 billion. At the intersection of this technological revolution and income generation lies the NEOS Nasdaq 100 High Income ETF (QQQI), a covered call ETF that combines exposure to AI-leaders like the Magnificent 7 with a high-yield strategy. With a dividend yield exceeding 14% and monthly distributions, QQQI has emerged as a compelling vehicle for investors seeking both capital appreciation and income in a sector poised for explosive growth.

A Covered Call Strategy Tailored for AI Growth

QQQI's structure centers on an options overlay designed to generate recurring income while maintaining upside potential in the Nasdaq 100. By selling covered calls on its portfolio, the ETF captures premium income, which contributes to its exceptional yield. While granular details on strike price selection and expiration cycles remain unspecified, the fund's monthly distribution schedule suggests a focus on shorter-term options strategies. This approach aligns with the volatility of the tech sector, where frequent rebalancing can optimize premium capture without capping long-term gains.

The ETF's tax efficiency further enhances its appeal. A significant portion of its distributions is classified as Return of Capital, reducing taxable income for investors. This structure differentiates QQQI from traditional dividend-paying ETFs, where yields are often eroded by tax liabilities.

Magnificent 7: The Engine of AI-Driven Growth

QQQI's portfolio is heavily concentrated in the Magnificent 7-Microsoft, Nvidia, Apple, Amazon, Tesla, Meta, and Alphabet-which collectively account for 38.9% of its holdings. These companies are not merely tech giants but foundational pillars of the AI ecosystem:
- Nvidia dominates AI GPU and data center markets, powering generative AI models for enterprises.
- Amazon and Microsoft lead in cloud infrastructure, enabling scalable AI deployment.
- Tesla and Meta are advancing AI in autonomous systems and social media algorithms, respectively.

This concentration positions QQQI to benefit directly from the projected 76% growth in AI spending. For instance, Nvidia's data center revenue is expected to rise in tandem with demand for AI training, while Amazon's AWS and Microsoft's Azure will likely see increased adoption of AI-driven cloud services.

Performance Outperformance and Market Position

Since its January 2024 launch, QQQI has delivered a 21.77% total return as of May 15, 2025, translating to a 16.5% annualized return. This outpaces peers like the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) and the Global X NASDAQ 100 Covered Call ETF (QYLD), which have struggled to match QQQI's combination of yield and price appreciation according to performance data. The ETF's success is partly attributed to its aggressive overweight in AI-leaders, which have outperformed broader Nasdaq 100 constituents amid the AI boom.

Moreover, QQQI has attracted $1.76 billion in assets under management, including $1.04 billion in May 2025 alone according to asset reports. This inflow reflects investor confidence in its dual mandate of income and growth, particularly as active ETFs continue to gain traction in a market favoring specialized strategies.

Risks and Considerations

While QQQI's strategy is compelling, its concentrated exposure to tech and AI stocks carries risks. A downturn in the sector-triggered by regulatory scrutiny, slowing AI adoption, or macroeconomic headwinds-could lead to underperformance. Additionally, the high yield relies on consistent premium capture, which may be challenged if volatility declines or call options expire worthless. Investors should also note that the Magnificent 7's dominance in the ETF amplifies sensitivity to earnings misses or valuation corrections in these stocks.

Conclusion: A Strategic Play for AI's Future

QQQI represents a unique synthesis of income generation and exposure to the AI-driven growth narrative. By leveraging a covered call strategy on the Magnificent 7, it offers investors a high-yield alternative to traditional tech ETFs while aligning with the secular tailwinds of AI adoption. As generative AI spending accelerates, QQQI's structure positions it to capitalize on both recurring income and capital appreciation-a rare combination in a market increasingly defined by volatility and specialization. For investors seeking to participate in the AI revolution without sacrificing yield, QQQI has emerged as a standout option.