Blackrock It manages more than $11.5 trillion in assets on behalf of its clients, making it the world’s largest investment firm. About $3.5 trillion is invested in exchange-traded funds (ETFs) through the iShares subsidiary.
ETFs can hold hundreds or even thousands of individual stocks. You can track the performance of a specific index. S&P 500Or you could be exposed to niche markets like artificial intelligence (AI).
Currently, iShares offers more than 1,400 ETFs for investors to choose from. It is one of them iShares Expanded Tech Sector ETF(NYSEMKT: IGM)It holds a broad portfolio of 290 technology stocks. It was founded in 2001, and since then has delivered better annual returns (on average) than the S&P 500. In the year This is the reason why it is likely to beat the index again in 2025.
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The iShares expanded technology sector ETF It invests in companies across the technology spectrum, including those in the hardware, software, Internet and media sectors. So have many companies Leaders in AIWhich has helped them to create huge amount of value in last two years.
Although the portfolio includes 290 stocks, the ETF’s top 10 positions account for 55.2% of its total value, and this list includes some of the biggest names in the AI space.
Stock
iShares Expanded Tech Sector ETF Portfolio Weight
1. Nivea
8.58%
2. Meta forums
8.53%
3. Apple
8.36%
4. Microsoft
8.21%
5. Broadcom
5.84%
6. Alphabet class A
4.83%
7. Alphabet class c
3.96%
8. Netflix
2.73%
9. sales force
2.32%
10. Oracle
1.88%
Data source: iShares. Portfolio weighting as of January 13, 2025.
Those stocks have averaged a 65.5% return through 2024, a 23% return on the S&P 500. In fact, all but one beat the S&P last year.
Nvidia stock could be a top performer again in 2025 as the company ships Blackwell’s new graphics processing units (GPUs) for data centers. They may be the most powerful chips in the world for developing AI models, and demand for them far outstrips supply.
Meta could have another strong year. Llama 4 plans to release a large-scale language model (LLM), which may be the most advanced in the industry, and investors should expect new AI features for its Facebook, Instagram, and WhatsApp platforms. Meta stock is currently attractively valued, so there is plenty of room for growth.
Microsoft and Alphabet will further improve their own AI models this year. Additionally, both companies should continue to make strong progress in their cloud computing divisions, where they offer data center computing capabilities and industry-leading LMs to business customers. That could be a source of price increases in their respective stock prices over the course of the year.
Outside of the top 10, the iShares ETF holds other popular AI stocks Advanced Micro Devices, Palantir Technologies, Micron Technology, CrowdStrikeand others.
The iShares Expanded Tech Sector ETF Since its inception in 2001, it has returned an annualized return of 11 percent, comfortably beating the average annual return of the S&P 500.
However, thanks to the rise of technologies such as enterprise software, cloud computing and AI, the ETF’s compound annual return has grown to 20.2% over the past 10 years. That crushes the S&P’s 13.7% annualized gain over the same period, and the difference is impressive in dollar terms.
Opening balance (2015 inclusive)
Annual return of collection
Final Balance (2024)
100,000 dollars
20.2% (iShares ETF)
629,570 dollars
100,000 dollars
13.7% (S&P 500)
361,081 dollars
Author’s calculations.
Although it is unrealistic to expect any fund to sustainably grow at 20% per year, the AI boom is still in its early stages. NVIDIA CEO Jensen Huang estimates that the tech giants will spend a total of $1 trillion over the next four years to upgrade their data centers to support the needs of AI developers. That would benefit the company, but the cost would accrue to other hardware vendors in the iShares ETF, such as Broadcom, AMD and Micron.
Moreover, analysts at PwC think that AI will add a total of 15.7 trillion dollars to the global economy by 2030. A lot of value is created by the companies in the ETF.
If some of the top-performing stocks from 2024, such as Nvidia, Meta and Broadcom, continue to lead the broader market this year, the iShares ETF is still likely to beat the S&P 500 convincingly.
However, it is important for investors to hold it as part of a diversified portfolio because AIAs fail to live up to expectations, which can lead to periods of underperformance for ETFs.
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Randy Zuckerberg, former director of market development and Facebook spokesperson and sister of Meta Platforms CEO Mark Zuckerberg, is a member of the Motley Fool’s board of directors. Alphabet CEO Susan Frey is a member of The Motley Fool’s board of directors. Anthony DiPizio It has no place in the said shares. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, CrowdStrike, Meta Platforms, Microsoft, Netflix, Nvidia, Oracle, Palantir Technologies and Salesforce. The Motley Fool recommends Broadcom and the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has Disclosure Policy.
