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Future Tech,

such as space technologies (ORBX), has enjoyed a halo effect from the SpaceX IPO that occurred in June 2026. The theme has strong growth prospects (positive Growth exposure) but is also expensive (negative Value exposure) and exhibits less financial strength and stability (negative Quality exposure). Recent selling pressures (as indicated by the 14-Day Relative Strength Index (RSI) as of 7/31/2026) may have become overextended after sentiment turned sharply negative from its late-May highs.

Artificial Intelligence (AI)-Adjacent

themes representing computing bottlenecks such as AI semiconductors/quantum (CHPX), along with critical inputs needed for capital spending on infrastructure / advanced devices such as rare earths and critical materials (EART), hydrogen (HYDR), and copper miners (COPX). As with space technologies, some of these themes (CHPX, HYDR) trade at expensive valuations (negative Value exposure), implying that the market is assigning more of the current valuation to future growth. We believe the structural growth narrative remains intact given the strong AI and broader infrastructure capital expenditure cycle. Several of these themes have experienced recent selling pressures (as indicated by the 14-Day RSI through 7/31/2026) and may have become overextended; we discuss semiconductors (CHPX) below in our highlighted Top Trending Theme.

Precious metals mining and/or exploration themes (such as GOEX) may face headwinds if rising inflation expectations prompt a hawkish monetary policy pivot from the Federal Reserve, favoring fiat currency over alternatives like precious metals and digital assets. Still, strong earnings growth and reasonable valuations may help buffer any such shift.

Energy Storage (LIT) and Climate Technology (CTEC) have benefitted from conventional energy supply constraints, as industrial users seek alternatives and producers pursue efficiency and storage incentives; both also appear on the Long-Term Reversal list below as these themes appear to be recovering from long-term underperformance versus the broader market. Autonomous and electric vehicles (DRIV) benefitted similarly from the search for transportation fuel alternatives.

Genomics (GNOM) rounds out the list, with renewed interest driven by AI’s transformative potential for gene therapy, drug discovery, and personalized medicine; it also appears on the Long-Term Reversal list below as this theme appears to be recovering from long-term underperformance versus the broader market.

AI is driving a fundamental restructuring of semiconductor architecture; specialized GPUs, ASICs, high-bandwidth memory, and ultra-fast networking are becoming the indispensable building blocks of next-gen computing. This demand for high-performance computing could influence trillions of dollars in computing infrastructure spending by 2030.⁶ CHPX tracks the Global X AI Semiconductor & Quantum Index, comprising companies providing computer hardware, infrastructure, and quantum technologies powering the next generation of AI and advanced computing.

Despite the sector’s historically cyclical behavior, AI-driven demand for memory and compute has outpaced supply, pushing it into a secular growth phase.⁸

As a result, the fund shows strong Growth and Quality factor readings.

However, the segment remains more volatile than the broader universe given its cyclicality, and traded at higher valuations versus its own history (see the index valuation chart below).

CHPX has positive exposure to Growth and Momentum but shows elevated Volatility and is marginally expensive (negative exposure to Value).

Forward Earnings Per Share (EPS) estimates for the underlying constituents in the Global X AI Semiconductor and Quantum Index (GXCHPXUN), the tracking index for CHPX, have accelerated as analysts keep raising estimates, yet the index traded at a lower Price-to-Earnings (P/E) ratio than a year ago, as earnings have grown faster than stock valuations have risen.

Forward EPS kept climbing as the forward P/E compressed; earnings growth, rather than multiple expansion, has driven higher valuations.

After peaking in mid-May, the fund has experienced recent selling pressures (as indicated by the 14-Day RSI through 7/31/2026) and may have become overextended, even with the current price still well above its 200 moving day average. A shift in risk appetite for the AI buildout could trigger a pullback, but “buy-the-dip” demand may persist if the intermediate positive pricing trends and underlying fundamentals hold.

Overall, the semiconductor/quantum computing theme has benefitted from a combination of positive price trends and strong growth fundamentals.

Price was well above intermediate support (200-Day Moving Average); the RSI pullback suggests consolidation within an intact uptrend.

Most alternative energy and climate technology themes appear to be recovering from long-term underperformance (Long-Term Reversal) based on recent positive Momentum.

Alternative energy inputs/processing, such as Renewable Energy Producers (RNRG), U.S. Natural Gas (LNG), Hydrogen (HYDR), Lithium & Battery Tech (LIT) and climate technology (CTEC), make up the bulk of this month’s out-of-favor list, but have also enjoyed recent price recoveries (Momentum) as the Iran-driven energy squeeze and AI data center buildout renew interest in alternative energy. We profile the hydrogen theme (HYDR) as this month’s Out-of-Favor Theme in Focus.

The genomics and biotechnology theme (GNOM) has long been out of favor but has seen renewed interest as AI advances gene therapy and drug discovery.

Defensive-oriented dividend payers (DIV, QDIV) and free cash flow generators (FLOW) remained out of favor amid strong “risk-on” appetite and an optimistic earnings-growth outlook. A shift away from pro-cyclical leadership would likely be the catalyst for a turnaround, and low valuations (Value) may offer support for patient investors.

Food-innovation and agricultural tech theme (KROP) remained out of favor as earnings normalized from the post-Russia/Ukraine hypergrowth period and tracked lower grain and soybean prices. We view the theme as attractively valued but in need of a growth catalyst.

Global investment in green hydrogen has surpassed $110 billion, as of September 2025, backing over 500 projects already operating, under construction, or past the final investment decision stage.⁸ Committed production capacity exceeded 6 million tonnes per year, with 1 million already operational. The broader pipeline suggests potential for 9–14 million tonnes by 2030. China leads with $33 billion in committed investments, followed by North America at $23 billion. Europe ranks third at $19 billion, though it is forecast to account for nearly two-thirds of global hydrogen demand by 2030. Amid this growth, about 50 weaker projects have been cancelled from 2023 through 2025 signaling an industry shifting from early enthusiasm toward execution. While some projects may not reach final development stages, the robust pipeline and advancement of more than 500 projects point to the growing opportunities within the hydrogen industry.

Environmental themes like alternative energy and climate technology have fallen out of favor in recent years¹⁰ amid declining ESG (Environmental, Social, Governance) mandates, softer EV demand¹¹, and lower baseload needs from unconventional fuels, reflected in HYDR’s negative Long-Term Reversal exposure.

Improved battery storage, surging AI data center power demand, and Iran-conflict-driven conventional fuel shortages are now fueling an alternative energy comeback, reflected in HYDR’s positive Momentum reading.

These fundamental tailwinds have also lifted HYDR’s Growth factor exposure relative to its own history.

Still, the theme trades largely on future prospects, the segment remains unprofitable (see below), with high valuations and weaker financial quality reflected in its Value and Quality factor scores.

HYDR has become less volatile (Volatility, 30-Day Idiosyncratic Return) as Growth improved but remains expensive and more speculative (negative Value, Quality) versus its history

Estimated earnings for the underlying constituents of the Solactive Global Hydrogen Index (the tracking index for HYDR) have improved, though the underlying constituents of the index remained unprofitable. As of 7/31/26, it traded at a higher forward Price/Sales multiple than in recent history, reflecting improving prospects, and room to grow into that valuation should commercial scale economics materialize.

Forward EPS for the Solactive Global Hydrogen Index has improved despite constituents having ongoing operating losses, while the Price/Sales ratio for the index has slowly expanded.

After rallying sharply through May 2026, HYDR has experienced recent selling pressures (as indicated by the 14-Day RSI through 7/31/2026) and may have become overextended. As with other technology-adjacent themes, it remains susceptible to a broader shift in risk appetite or the AI infrastructure narrative.

The hydrogen theme is enjoying an improving investment outlook: HYDR potentially offers high operating leverage to more widespread adoption, may be emerging from a long period of underperformance (as indicated by Long-Term Reversal and recent Momentum for the period ending 7/31/2026), and should benefit from an improving growth outlook over the next decade.

HYDR’s price has mostly trended higher than its 200-day moving average although it broke the trendline in the most recent pullback. The RSI points to oversold conditions.

For themes with positive price trends, consider future tech and AI-adjacent themes (ORBX, CHPX) and critical inputs (COPX, EART, HYDR). Precious metal miners and/or explorers (such as GOEX) remain pressured by inflation and rate uncertainty but could see better entry points if inflation eases. We highlighted CHPX as a Top Trending Theme following July’s tech sell-off.

For out-of-favor themes showing recent recovery, consider alternative energy and environmental technology (HYDR, LIT, RNRG, CTEC) and life sciences (GNOM). Defensive, dividend- and cashflow-focused themes (DIV, QDIV, FLOW) and food innovation/ agriculture tech (KROP) remained out of favor but could turn if sentiment shifts defensive. We highlighted HYDR as a Top Out-of-Favor Theme given its improving growth prospects.

AI’s rapid expansion is shifting the semiconductor bottleneck from compute to memory, positioning high-bandwidth memory leaders to benefit.

AI’s rapid expansion is shifting the semiconductor bottleneck from compute to memory, positioning high-bandwidth memory leaders to benefit.

Artificial intelligence may be revolutionary, but it’s not possible without specialized hardware, creating a large potential opportunity for chipmakers.

Depleted stockpiles are accelerating procurement, adding to defense tech earnings tailwinds from broader defense modernization.