diff --git a/packages/query-core/src/queryObserver.ts b/packages/query-core/src/queryObserver.ts
index 123996e572..1a14679a19 100644
--- a/packages/query-core/src/queryObserver.ts
+++ b/packages/query-core/src/queryObserver.ts
@@ -240,7 +240,28 @@ export class QueryObserver<
   ): QueryObserverResult<TData, TError> {
     const query = this.client.getQueryCache().build(this.client, options)
 
-    return this.createResult(query, options)
+    const result = this.createResult(query, options);
+
+    if (!options.keepPreviousData) {
+      // this assigns the optimistic result to the current Observer
+      // because if the query function changes, useQuery will be performing
+      // an effect where it would fetch again.
+      // When the fetch finishes, we perform a deep data cloning in order
+      // to reuse objects references. This deep data clone is performed against
+      // the `observer.currentResult.data` property
+      // When QueryKey changes, we refresh the query and get new `optimistic`
+      // result, while we leave the `observer.currentResult`, so when new data
+      // arrives, it finds the old `observer.currentResult` which is related
+      // to the old QueryKey. Which means that currentResult and selectData are
+      // out of sync already.
+      // To solve this, we move the cursor of the currentResult everytime
+      // an observer reads an optimistic value.
+
+      // When keeping the previous data, the result doesn't change until new
+      // data arrives.
+      this.currentResult = result
+    }
+    return result
   }
 
   getCurrentResult(): QueryObserverResult<TData, TError> {
diff --git a/packages/react-query-persist-client/src/__tests__/PersistQueryClientProvider.test.tsx b/packages/react-query-persist-client/src/__tests__/PersistQueryClientProvider.test.tsx
index 3aa840221f..bce3257568 100644
--- a/packages/react-query-persist-client/src/__tests__/PersistQueryClientProvider.test.tsx
+++ b/packages/react-query-persist-client/src/__tests__/PersistQueryClientProvider.test.tsx
@@ -325,7 +325,7 @@ describe('PersistQueryClientProvider', () => {
     await waitFor(() => rendered.getByText('data: null'))
     await waitFor(() => rendered.getByText('data: hydrated'))
 
-    expect(states).toHaveLength(3)
+    expect(states).toHaveLength(2)
 
     expect(fetched).toBe(false)
 
@@ -340,9 +340,6 @@ describe('PersistQueryClientProvider', () => {
       fetchStatus: 'idle',
       data: 'hydrated',
     })
-
-    // #5443 seems like we get an extra render now ...
-    expect(states[1]).toStrictEqual(states[2])
   })
 
   test('should call onSuccess after successful restoring', async () => {
diff --git a/packages/react-query/src/__tests__/useQuery.test.tsx b/packages/react-query/src/__tests__/useQuery.test.tsx
index 2fb62e5b45..588942a9a2 100644
--- a/packages/react-query/src/__tests__/useQuery.test.tsx
+++ b/packages/react-query/src/__tests__/useQuery.test.tsx
@@ -914,7 +914,7 @@ describe('useQuery', () => {
     // required to make sure no additional renders are happening after data is successfully fetched for the second time
     await sleep(100)
 
-    expect(states.length).toBe(5)
+    expect(states.length).toBe(4)
     // First load
     expect(states[0]).toMatchObject({ isLoading: true, isSuccess: false })
     // First success
@@ -922,9 +922,11 @@ describe('useQuery', () => {
     // Remove
     expect(states[2]).toMatchObject({ isLoading: true, isSuccess: false })
     // Hook state update
-    expect(states[3]).toMatchObject({ isLoading: true, isSuccess: false })
+    // this update is now skipped ! because nothing changed
+    // see github issue: https://github.com/TanStack/query/issues/5538
+    // expect(states[3]).toMatchObject({ isLoading: true, isSuccess: false })
     // Second success
-    expect(states[4]).toMatchObject({ isLoading: false, isSuccess: true })
+    expect(states[3]).toMatchObject({ isLoading: false, isSuccess: true })
   })
 
   it('should fetch when refetchOnMount is false and nothing has been fetched yet', async () => {
@@ -3650,6 +3652,7 @@ describe('useQuery', () => {
           )
           act(() => setPrefetched(true))
         }
+
         prefetch()
       }, [])
 
@@ -5879,6 +5882,7 @@ describe('useQuery', () => {
         </div>
       )
     }
+
     const rendered = renderWithClient(queryClient, <Page />)
     const fetchBtn = rendered.getByRole('button', { name: 'refetch' })
     await waitFor(() => rendered.getByText('data: 1'))
@@ -5916,8 +5920,84 @@ describe('useQuery', () => {
         </div>
       )
     }
+
     const rendered = renderWithClient(queryClient, <Page />)
     await waitFor(() => rendered.getByText('status: success'))
     await waitFor(() => rendered.getByText('data: 1'))
   })
+  it('should reuse same data object reference when queryKey changes back to some cached data', async () => {
+    jest.useFakeTimers()
+    const spy = jest.fn()
+
+    function fetchNumber(id: number) {
+      return new Promise((resolve) => {
+        setTimeout(
+          () =>
+            resolve({
+              numbers: {
+                current: {
+                  id,
+                },
+              },
+            }),
+          1000,
+        )
+      })
+    }
+    function Test() {
+      const [id, setId] = React.useState(1)
+
+      const { data } = useQuery({
+        select: selector,
+        queryKey: ['user', id],
+        queryFn: () => fetchNumber(id),
+      })
+
+      React.useEffect(() => {
+        spy(data)
+      }, [data])
+
+      return (
+        <div>
+          <button name="1" onClick={() => setId(1)}>
+            1
+          </button>
+          <button name="2" onClick={() => setId(2)}>
+            2
+          </button>
+          <span>Rendered Id: {data?.id}</span>
+        </div>
+      )
+    }
+
+    function selector(data: any) {
+      return data.numbers.current
+    }
+
+    const rendered = renderWithClient(queryClient, <Test />)
+    expect(spy).toHaveBeenCalledTimes(1)
+    spy.mockClear()
+    jest.advanceTimersByTime(1000)
+    await waitFor(() => rendered.getByText('Rendered Id: 1'))
+    expect(spy).toHaveBeenCalledTimes(1)
+    spy.mockClear()
+
+    fireEvent.click(rendered.getByRole('button', { name: /2/ }))
+    jest.advanceTimersByTime(1000)
+    await waitFor(() => rendered.getByText('Rendered Id: 2'))
+    expect(spy).toHaveBeenCalledTimes(2) // called with undefined because id changed
+    spy.mockClear()
+
+    fireEvent.click(rendered.getByRole('button', { name: /1/ }))
+    jest.advanceTimersByTime(1000)
+    await waitFor(() => rendered.getByText('Rendered Id: 1'))
+    expect(spy).toHaveBeenCalledTimes(1)
+    spy.mockClear()
+
+    fireEvent.click(rendered.getByRole('button', { name: /2/ }))
+    jest.advanceTimersByTime(1000)
+    await waitFor(() => rendered.getByText('Rendered Id: 2'))
+    expect(spy).toHaveBeenCalledTimes(1)
+    spy.mockClear()
+  })
 })