Key Points By buying this ETF, investors will automatically get exposure to some of the leading tech and internet companies in AI. Returns over the past decade have been truly exceptional. Should AI progress stall, the overall market could take a hit. 10 stocks we like better than Invesco QQQ Trust › The amount of money that companies are spending to expand their technical infrastructure is eye-popping. However, it's all being done to better handle the demand for artificial intelligence (AI) produ ...

Nvidia CEO Jensen Huang gestures as U.S. President Donald Trump (not pictured) delivers remarks during the "Winning the AI Race" Summit in Washington D.C., U.S., July 23, 2025.Nvidia this week said it'll invest $100 billion into OpenAI in a deal that highlights just how big the chipmaker's investment portfolio has become since the arrival of generative AI in 2022.That deal came just one week after Nvidia committed a $5 billion investment into one-time rival Intel, and after the company announced its intenti ...

Market Overview - U.S. equities rebounded in Q2 2025 after a correction in Q1, overcoming tariff and growth concerns, as well as geopolitical issues, leading to solid gains [2] - The recovery was characterized by a return to AI market leadership, with hyperscalers committing to high levels of AI-driven capital expenditures [2] - Semiconductor companies experienced benefits from strong earnings and renewed expectations for widespread AI adoption [2] Company Performance - Broadcom (AVGO) saw significant gains due to increased enthusiasm for AI buildouts and its custom-designed chips gaining traction as alternatives to Nvidia's GPUs [3] - Microchip Technology (MCHP) reported strong financial results, benefiting from a cyclical rebound and the return of its long-tenured CEO [4] - Meta Platforms (META) shares rose as the company continued to gain digital advertising market share, with AI enhancing engagement and monetization [5] Sector Analysis - The health care sector faced challenges, with UnitedHealth Group (UNH) underperforming due to higher utilization rates and executive changes, while Becton Dickinson (BDX) reported slower-than-expected sales growth [5] - McKesson (MCK) performed well, benefiting from strong fundamentals in U.S. pharma and specialty distribution [5] - In industrials, the portfolio was underweight in high-momentum stocks benefiting from AI demand, although Eaton (ETN) performed strongly [6] Portfolio Positioning - Minimal positioning changes occurred, with a focus on consumer staples; Procter & Gamble (PG) was added to the portfolio as a defensive measure amid inflation concerns [7] - The portfolio strategy emphasizes stock-level decisions over macroeconomic predictions, aiming for best-in-class franchises at attractive valuations [8] Market Outlook - The current market presents favorable opportunities for disciplined long-term stock pickers, particularly in value stocks, as valuation disparities between growth and value stocks have widened [9][12] - Historical trends suggest that value stocks tend to recover following significant underperformance compared to growth stocks [9] Portfolio Highlights - The ClearBridge Large Cap Value ESG Strategy modestly underperformed its benchmark, with positive contributions from IT and financials, while health care was a main detractor [13] - Stock selection negatively impacted performance, particularly in industrials and health care, while sector allocation was beneficial [14] - Key contributors included Broadcom, Microchip Technology, Eaton, JPMorgan Chase (JPM), and Meta Platforms, while Becton Dickinson and UnitedHealth Group were notable detractors [15]

Core Viewpoint - The technology sector is experiencing significant growth, driven by major companies like Nvidia and Microsoft, which have surpassed $4 trillion in market capitalization [1] Investment Strategies - Investors can gain exposure to top tech stocks through direct purchases or exchange-traded funds (ETFs), with a notable portion of the S&P 500's holdings in the tech sector [2] - A low-cost technology sector ETF, such as the Vanguard Information Technology ETF, may provide better exposure to hardware, software, and semiconductor companies compared to general growth ETFs or S&P 500 index funds [3] Major Holdings - Approximately 50% of the Vanguard Tech ETF is concentrated in four companies: Nvidia, Microsoft, Apple, and Broadcom, while notable companies like Alphabet and Meta Platforms are excluded [5] - Nvidia's GPUs are essential for AI data centers, and Broadcom is assisting cloud computing firms in designing custom chips [8] Company Performance - Microsoft is a leader in cloud computing and AI, with high margins and growth rates justifying its valuation [6] - Apple is making strides in AI by rolling out new tools and design upgrades, focusing on user-friendly features [7] - Nvidia and Broadcom benefit from substantial spending by major hyperscale customers, with over half of Nvidia's revenue in the latest quarter coming from four key companies [9] ETF Characteristics - The Vanguard Tech ETF offers diversified exposure across various tech sectors, including cloud infrastructure, application software, and gaming, with a total of 319 holdings [11] - The ETF has a price-to-earnings ratio of 39.2, higher than the 27.6 ratio of the Vanguard S&P 500 ETF, reflecting investor expectations for faster earnings growth in the tech sector [13] Historical Performance - The tech sector has consistently outperformed other sectors, achieving a total return of 270.8% over the last decade, compared to 144.9% for the S&P 500 [15] Considerations for Investors - Investors should assess their exposure to major holdings before investing in the ETF, especially if they already have significant positions in companies like Nvidia [17] - The tech sector is characterized by high valuations and volatility, which may not suit all investors, particularly those seeking passive income [19]

Group 1 - NVIDIA Corporation is the undisputed leader in accelerated computing, holding a dominant market share in Graphics Processing Units (GPUs) [3]

Core Viewpoint - The current market presents opportunities to invest in quality AI stocks like Nvidia, ASML, and Amazon, which are perceived as undervalued compared to their historical valuations [1][12]. Nvidia - Nvidia's stock is trading at approximately 52.5 times operating cash flow, which appears high, but its five-year average cash-flow multiple is 55.1, indicating a more attractive valuation [3]. - The trailing P/E ratio for Nvidia is 53, while its five-year average P/E ratio is 70.2, suggesting that shares are currently priced attractively [4]. - Nvidia plays a crucial role in the AI industry by designing graphics processing units for data centers and holding stakes in various AI companies [5]. ASML - ASML is essential for the production of advanced semiconductors used in AI applications, providing EUV lithography systems that enable high-density microchip manufacturing [6][7]. - The trailing P/E ratio for ASML is 33.7, which may not seem like a bargain, but its five-year trailing earnings multiple is 40.8, making the current valuation more appealing [8]. Amazon - Amazon's stock has increased by 2.6% in 2025, lagging behind the S&P 500's 6.4% rise, but this underperformance may create a good entry point for new investors [9][10]. - Currently, Amazon's shares are priced at 36.7 times trailing earnings, significantly lower than its five-year average P/E of 64.1, indicating a discount [10]. - Amazon has extensive exposure to the AI industry through its cloud platform, AWS, and various AI tools, positioning it well for future growth [11]. Investment Opportunities - Despite initial perceptions of high valuations, Nvidia, ASML, and Amazon are available at discounts when considering their historical valuations, making them attractive options for investors seeking AI exposure [12]. - Among these, Nvidia is highlighted as the best choice for concentrated exposure to the growing AI field [13].

Group 1 - Nvidia CEO Jensen Huang sold approximately $36.4 million worth of stock, totaling 225,000 shares, as part of a prearranged plan to unload up to 6 million shares by the end of the year [1][2] - Huang's previous stock sales included a $15 million sale in June and about $700 million worth of shares sold last year under a similar plan [2] - Nvidia's stock price increased by about 1% on the day of Huang's recent stock sale [2] Group 2 - Huang's net worth has increased significantly, rising by over 25%, or approximately $29 billion, since the beginning of 2025, reaching $143 billion [3] - As of the latest analysis, Huang's net worth positions him closely with Warren Buffett, with Huang at $143.7 billion and Buffett at $142.1 billion [4]

Core Insights - Nvidia shares increased over 2%, achieving a market capitalization of $4 trillion for the first time, making it the first company to reach this milestone [1] - Nvidia has surpassed both Microsoft and Apple, which previously reached the $3 trillion mark, establishing itself as the world's most valuable company [2] - The company has significantly benefited from the rising demand for artificial intelligence hardware and chips, particularly since the launch of ChatGPT in late 2022 [3] Company Performance - Nvidia's market value first crossed the $2 trillion threshold in February 2024 and then surpassed $3 trillion in June 2025 [2] - The company is recognized as a leader in producing graphics processing units essential for powering large language models [3] Industry Context - The generative artificial intelligence boom has driven substantial investor interest in Nvidia, highlighting the growing importance of AI technology in the tech sector [1][3] - Nvidia's relationship with Microsoft, one of its largest customers, underscores the interconnectedness of major players in the AI hardware market [2]

Group 1: Nvidia - Nvidia shares have advanced 18% year to date, with a market value potentially reaching $5 trillion by the end of 2026 [1][7] - The company dominates the AI accelerator market, accounting for about 90% of sales, and is also a leader in networking gear for generative AI workloads [4][5] - Nvidia's first-quarter revenue rose 69% to $44 billion, driven by AI infrastructure demand, with non-GAAP net income increasing 33% to $0.81 per diluted share [6] - Analysts project Nvidia's adjusted earnings to grow at 41% annually through January 2027, making its current valuation of 50 times adjusted earnings reasonable [8] Group 2: Microsoft - Microsoft shares have also advanced 18% year to date, with a potential market value of $5 trillion within 18 months [1][7] - The company generates significant revenue from enterprise software and cloud computing, with a strong position in various software verticals and the second-largest public cloud [9] - Microsoft reported a 13% revenue increase to $70 billion in the third quarter of fiscal 2025, with strong momentum in Azure and a threefold increase in Microsoft 365 Copilot users [11] - Wall Street estimates Microsoft's earnings will grow at 13% annually through June 2026, although the current valuation of 38 times earnings may be considered expensive [12][13]

Group 1: Nvidia - Nvidia's fiscal first-quarter sales surged 12% from the previous quarter and 69% year-over-year, driven by strong demand for its graphics processing units (GPUs) [4] - The stock price increased by 67% from a low point in April, with expectations of significant data center spending projected to reach $300 billion by 2025 and over $1 trillion by 2028 [5][6] - Nvidia benefits from a strong network effect, as developers are familiar with its CUDA software development kit, making it challenging for competitors to gain market share [7] - The stock is currently trading at 36.8 times forward earnings estimates, indicating a high valuation that may be risky if future data center spending does not meet expectations [8] Group 2: Sportradar Group - Sportradar Group has capitalized on the legalization of sports betting in the U.S., with partnerships across major sports leagues and organizations, positioning itself as a leader in the sports data niche [9][10] - The company reported a 17% year-over-year increase in first-quarter sales and anticipates continued growth, with the sports betting market expected to grow by 17% annually through 2029 [12] - Sportradar's stock is trading at 53 times its trailing free cash flow, which appears steep but is justified by management's expectation of at least 33% annual growth in free cash flow over the next three years [13][14]