Meet the Spectacular Vanguard ETF With 43.2% of Its Portfolio Invested in Nvidia, Amazon, Apple, and Microsoft

Core Viewpoint - The S&P 500 has achieved back-to-back annual gains of 25% or more only twice in its history, during the dot-com boom and the current AI boom [1] Group 1: Performance and Key Companies - The significant gains in the S&P 500 over the last two years have been primarily driven by major companies like Nvidia, Amazon, Apple, and Microsoft, which have seen average stock gains of 106% in 2023 and 64% in 2024 [2] - Investors not holding these four stocks have likely underperformed the S&P 500 by a considerable margin [2][3] - The Vanguard Mega Cap Growth ETF holds 69 large-cap stocks, with 43.2% of its portfolio value attributed to Nvidia, Amazon, Apple, and Microsoft [3] Group 2: Sector Weightings and AI Focus - The technology sector constitutes 59.7% of the Vanguard Mega Cap Growth ETF's total value, with Apple, Microsoft, and Nvidia being the top three holdings [4] - The consumer discretionary sector, which includes Amazon, has a weighting of 20.9% in the ETF [5] - All four major companies are heavily focused on AI, developing new products and enhancing existing ones with AI technology [6] Group 3: AI Infrastructure and Tools - Microsoft and Amazon operate the largest cloud computing platforms, providing essential tools for businesses to create AI software [7] - Both companies have integrated AI assistants into their legacy products, enhancing user experience [8] - Nvidia plays a crucial role by supplying advanced GPUs necessary for AI development, with significant revenue opportunities anticipated [9] Group 4: Investment Performance and Strategy - The Vanguard ETF has achieved a compound annual return of 13.1% since its inception in 2007, outperforming the S&P 500's average annual return of 10.4% [11] - A balanced investment strategy involving the Vanguard ETF can lead to higher returns compared to investing solely in the S&P 500 [12]