Meet the Spectacular Vanguard ETF With 43.6% of Its Portfolio Invested in Nvidia, Apple, and Microsoft

Core Insights - The information technology sector is the largest in the S&P 500, with a weighting of 35.1%, driven by major companies like Nvidia, Microsoft, and Apple, which together have a market capitalization of $12 trillion [1][5] - Over the past decade, the S&P 500 information technology sector has gained nearly 700%, significantly outperforming the overall S&P 500, which has tripled in value [2][4] - Investors excluding the information technology sector would have seen only an 81% return over the past 10 years, highlighting the importance of including tech stocks to match market performance [4] Investment Opportunities - The Vanguard Information Technology ETF (VGT) simplifies investment in the tech sector, holding 314 stocks, with 43.6% of its portfolio in Nvidia, Microsoft, and Apple [5][12] - The ETF covers 12 sub-segments of the tech sector, with semiconductors being the largest at 31.3%, reflecting Nvidia's valuation increase from $360 billion to $4.4 trillion in 2023 [7][8] - The top 10 holdings in the Vanguard ETF are all contributing to the AI industry, with Nvidia, Apple, and Microsoft being the most significant players [8] AI Sector Dynamics - Companies like Microsoft and Oracle are major consumers of data center chips, experiencing high demand for their AI software and computing capacity [9] - Palantir has seen a 300% stock gain in the past year, driven by its AI platforms that help organizations leverage their data [10][11] - The Vanguard ETF also includes other notable AI stocks such as Adobe, Snowflake, and cybersecurity firms like Palo Alto Networks and CrowdStrike [11] Performance Metrics - The Vanguard Information Technology ETF has delivered a compound annual return of 14.2% since its inception in 2004, outperforming the S&P 500's 10.4% annual growth [12] - The ETF is recommended for investors looking to diversify away from defensive sectors known for slower growth, such as financials and consumer staples [13] - Given the ongoing significance of AI, investors with limited exposure to major tech stocks may consider investing in the Vanguard Information Technology ETF [14]