Published on: 2026-06-25
For most of its life, the First Trust Cloud Computing ETF (SKYY) was a quiet thematic fund. In 2026, as AI spending poured into the cloud, it became one of the simpler ways to own that shift in a single ticker.
SKYY ETF tracked the cloud layer of the AI infrastructure boom, not the whole physical buildout. It captures cloud platforms, networking, storage, databases, cybersecurity, and software, but not direct semiconductor stocks, power, cooling, utilities, or data-center REITs.
That boundary is the whole story. SKYY has no dedicated semiconductor, power, cooling, utility, or data-center REIT exposure, so it follows the AI money that moves through the cloud rather than the physical base beneath it. That shapes how the fund performed in 2026, what it costs, and who it actually suits.
SKYY tracks the ISE CTA Cloud Computing Index, covering Infrastructure-as-a-Service, Platform-as-a-Service, and Software-as-a-Service.
It captures the cloud layer of AI spending, the platforms, networking, storage, databases, security, and software, not chips, power, or real estate.
The portfolio is software-led, with Software at 44.30% and IT Services at 26.17% of sector exposure as of 23 June 2026.
A sharp three-month rebound left SKYY up 31.74% on a NAV basis to 29 May, but it lagged broad technology over the year-to-date and one-year periods.
Valuation is rich, roughly 38 times earnings, which ties returns to continued cloud and AI growth.
The fund works best as a satellite AI-cloud position, not a substitute for semiconductor, power, or data-center infrastructure exposure.
| Metric | Detail |
|---|---|
| Fund | First Trust Cloud Computing ETF |
| Ticker / exchange | SKYY / Nasdaq |
| Index tracked | ISE CTA Cloud Computing Index |
| Inception | 5 July 2011 |
| Expense ratio | 0.60% |
| Net assets | $2.66 billion |
| Holdings excluding cash | 63 |
| Closing NAV / market price | $129.13 / $129.08 |
| 52-week market-price range | $104.16 to $155.17 |
| NAV return, 3 months | +31.74% |
| NAV return, year to date | +11.08% |
| NAV return, 1 year | +25.76% |
| NAV return, 3-year annualized | +25.94% |
| NAV return, 5-year annualized | +8.27% |
| NAV return, 10-year annualized | +16.99% |
Net assets, NAV, market price, and the 52-week range are as of 24 June 2026; holdings and sector weights are as of 23 June 2026; performance is as of 29 May 2026. At $129.08, SKYY traded about 16.8% below its 52-week high of $155.17, a sign that the cloud trade rebounded in 2026 without reclaiming its peak. [1]
AI infrastructure spending has not stayed inside semiconductors. Cloud budgets widened to cover compute access, storage, security, data platforms, and enterprise software, because a company that buys or rents accelerated compute also needs orchestration, data pipelines, observability, networking, and software platforms that can absorb AI features.
That second layer is where the recurring money lands. A chip sale is more transactional; the cloud capacity, data services, security tools, and software that run on top of that infrastructure can create recurring usage and subscription revenue.
SKYY became more relevant in 2026 because it owns the companies collecting that recurring spend rather than the ones selling the hardware.
The thesis is not abstract. The 2026 results from the largest cloud providers, several of them SKYY holdings, show AI demand landing as cloud revenue:
Microsoft reported Azure and other cloud services revenue up 40% year over year, with its AI business passing a $37 billion annual run rate, up 123%. [3]
Amazon’s AWS generated $37.6 billion in the March quarter, up about 28% year over year. [4]
Google Cloud revenue grew 63% to more than $20 billion, with backlog nearly doubling quarter over quarter to more than $460 billion. [5]
Oracle’s cloud infrastructure revenue rose 93% in its fiscal fourth quarter, and remaining performance obligations reached $638 billion. [6]
These are company-reported figures, not forecasts, and they explain why a long-standing cloud fund drew fresh attention in 2026. The same trend frames the risk: much of this growth is funded by record capital spending, so the market increasingly wants proof that cloud revenue converts into profit.
Listed by ticker, SKYY can read like a generic tech basket. Grouped by what each holding does in the AI-cloud stack, the exposure is clearer:
| AI-Cloud Function | SKYY Examples | Investor Meaning |
|---|---|---|
| Cloud platforms | Microsoft, Amazon, Alphabet, Oracle | Where AI workloads are hosted and monetized |
| AI cloud compute | CoreWeave, DigitalOcean | Rented and specialized cloud capacity |
| Networking | Arista, Cloudflare | AI traffic and data-center connectivity |
| Databases and data | MongoDB, Snowflake | AI needs organized, accessible data |
| Storage and hardware | Dell, HPE, NetApp | Enterprise AI drives storage and infrastructure refresh |
| Security and monitoring | Zscaler, Datadog | AI adoption raises visibility and protection needs |
Read this way, SKYY is less a list of technology names and more a map of where AI demand goes once it leaves the chip. [2]
One structural detail explains why SKYY does not behave like a mega-cap AI fund.
The ISE CTA Cloud Computing Index caps individual holdings at 4.5%, applies a 0.25% floor, limits the index to 80 securities, and rebalances quarterly, so Microsoft, Amazon, Alphabet, Arista, CoreWeave, and smaller cloud names sit closer together than they would in a market-cap-weighted technology ETF. As of 23 June, the largest holding, Arista Networks, was 4.15% of assets, with DigitalOcean at 4.11%, Nutanix at 3.75%, and Alphabet and Everpure each at 3.71%. [1]
That cap lowers single-stock risk and spreads exposure across the AI-cloud stack. The trade-off is performance drag when one or two mega-cap AI leaders dominate the market. SKYY is built to diversify the cloud theme, not to chase the biggest AI winner.
SKYY rebounded hard in 2026, but the gains tracked the cloud trade more than broad technology leadership. Over the three months to 29 May, its NAV rose 31.74%, broadly in line with the S&P Composite 1500 Information Technology Index’s 31.13% gain over the same period.
The lag appears over longer windows: SKYY’s year-to-date NAV return of 11.08% roughly matched the S&P 500’s 11.27% and trailed the S&P Composite 1500 Information Technology Index’s 24.60%, while its one-year return of 25.76% fell short of the technology benchmark’s 57.15%.
The pattern fits the fund’s design. SKYY captures the cloud layer of the AI trade, so it joins AI-cloud rallies but does not lead when mega-cap AI names or chipmakers carry the index.
Investors comparing SKYY with broad technology funds such as QQQ, XLK, or VGT can read EBC’s separate guide on how SKYY compares with other technology ETFs. This article focuses instead on SKYY’s role in the 2026 AI-cloud infrastructure spending cycle. [1]
As of 29 May 2026, SKYY traded at roughly 38 times earnings, 7.60 times book value, 27.32 times cash flow, and 4.27 times sales. Those multiples leave it exposed to interest rates, cloud earnings disappointments, delayed AI monetization, software-sector weakness, and margin pressure. The figures are dated and vary by data provider, so they are best read as elevated rather than precise.
The deeper question is profitability. AI demand can lift cloud revenue, but the payoff depends on whether higher usage becomes free cash flow. If cloud and software providers must keep spending on compute, talent, and infrastructure to defend growth, faster revenue need not turn into operating leverage.
The bull case is that AI demand keeps broadening beyond chips. As enterprises move from testing AI to running it at scale, spending should flow into cloud platforms, networking, databases, storage, security, and software, the categories SKYY holds in one instrument.
The 4.5% cap and diversified book also cushion any single company’s earnings miss, which makes the fund a cleaner way to own the theme than choosing among Microsoft, Amazon, Alphabet, Oracle, CoreWeave, and Arista individually.
The bear case is twofold. First, valuation: near 38 times earnings, SKYY already prices in years of growth and can rerate quickly if AI spending cools or software firms struggle to charge for AI features.
Second, leadership rotation: if the market refocuses on the physical bottlenecks of AI, the GPUs, power, cooling, and data-center real estate the fund does not own, SKYY can lag badly. Its cap on mega-caps showed that drag over the year to 29 May, when the technology benchmark outpaced it by a wide margin.
SKYY suits investors who believe AI spending will keep moving into cloud platforms, networking, databases, cybersecurity, and software, and who want that exposure in one diversified position rather than a single stock.
It is a weaker fit for investors who want direct exposure to GPUs, power equipment, cooling systems, utilities, or data-center REITs, where the fund offers nothing dedicated. For most portfolios its role is a satellite AI-cloud allocation beside broader equity or technology holdings, a role that has to earn the 0.60% fee.
The cloud layer of AI spending is exactly what SKYY is built to capture. For traders interested in exploring NASDAQ: SKYY, it is available to trade on EBC Financial Group. As with any such product, traders should do their due diligence to confirm product availability, costs, and leverage before trading.
Not the physical kind. SKYY owns the cloud layer of AI infrastructure, the platforms, networking, storage, databases, security, and software, but not semiconductors, power, cooling, utilities, or data-center REITs.
Because AI spending increasingly moved through the cloud. As enterprises ran AI workloads, demand flowed into the compute, data, security, and software services SKYY holds, turning a long-standing cloud fund into a proxy for that layer of the AI cycle.
The physical buildout. When the market rewards chipmakers, power and cooling suppliers, utilities, or data-center REITs, SKYY can lag because it has no dedicated exposure to those segments.
For most investors it works as a satellite position. Its 0.60% fee, single-theme focus, and 4.5% cap on individual holdings make it a complement to broad technology exposure rather than a core allocation.
SKYY is not the whole AI infrastructure trade, and the headline’s reference to “every AI infrastructure spending wave” holds only at the cloud layer. The fund owns the businesses turning AI demand into cloud revenue, network traffic, database usage, security spend, and software subscriptions, while leaving the chips, power, cooling, and real estate to other vehicles.
If you believe that cloud layer will keep growing, SKYY ETF is one of the more direct ways to hold it in a single ticker, provided that you accept a premium valuation and a fund built to diversify the AI-cloud theme rather than to lead it.
