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Yahoo
37 minutes ago
- Yahoo
AI Development Is Accelerating: 1 Vanguard ETF to Buy Right Now
Key Points The fund provides exposure to the AI hardware and software supply chain while maintaining an ultra-low 0.09% expense ratio. Top holdings, including Nvidia, Microsoft, and Apple, represent companies dominating different segments of the AI revolution. The fund has nearly doubled the S&P 500's returns over the past 15 years. 10 stocks we like better than Vanguard Information Technology ETF › Everyone's hunting for the next Nvidia (NASDAQ: NVDA), but they're looking in the wrong place. The real artificial intelligence (AI) opportunity lies in owning the companies supplying the chips, cloud platforms, and enterprise software powering today's AI gold rush. With $300 billion in infrastructure spending from tech giants this year alone, modern prospectors are investing in computing and networking. The companies selling that infrastructure are the ones striking gold. For investors who prefer to avoid single-stock risk, the Vanguard Information Technology ETF (NYSEMKT: VGT) provides exposure to the AI technology supply chain. Read on to find out more about this top AI vehicle. The accidental AI fund This exchange-traded fund (ETF) wasn't designed as an AI play when it was launched in 2004, years before deep learning went mainstream. But through market-cap weighting and technology's winner-take-all dynamics, it has become a strong proxy for the AI build-out. Nvidia commands 16.7% of the fund, reflecting its stranglehold on the GPU market that powers AI training. Microsoft (NASDAQ: MSFT) represents 14.9%, with its Azure cloud platform hosting everything from OpenAI's ChatGPT to thousands of enterprise AI applications. Apple rounds out the top three at 13%, preparing to push AI features to over 2.35 billion active devices. The concentration gets more interesting further down. Broadcom, at 4.6%, designs custom AI chips for hyperscalers and supplies the networking gear that keeps data flowing between thousands of processors. Oracle, at 2%, has reinvented itself as an AI cloud provider, winning customers with specialized infrastructure for training large models. These aren't speculative bets. Microsoft's cloud revenue hit $40.9 billion last quarter, up 21% year over year. Nvidia's data center revenue reached $39.1 billion in its most recent quarter, up 73% relative to the same period a year ago. The AI gold rush is generating real revenue, and this fund captures the companies mining the most gold. Beyond the mega-caps and long-term performance The ETF's reach extends beyond its mega-cap holdings, with 319 stocks providing AI exposure across the technology stack. Palantir Technologies (1.6%) delivers AI solutions to government agencies and Fortune 500 clients. Cisco Systems (1.6%) supplies the networking hardware that links together vast AI computing clusters. IBM (1.6%) deploys its Watson AI platform to help enterprises integrate advanced analytics and automation into their operations. Over the past 15 years, the fund has delivered 19.7% annual total returns (including distributions), turning $10,000 into roughly $155,000. That's about 9 percentage points per year ahead of the benchmark S&P 500 over the same period. That's the power of owning the leaders in the most important technological innovation of our time. Upside potential, fees, and risk profile Analysts remain optimistic about the ETF's largest holdings, thanks to AI spending. Morgan Stanley estimates that Microsoft, Amazon, Alphabet, and Meta Platforms will invest about $300 billion in AI infrastructure in 2025. That level of investment should directly benefit the ETF's hardware and semiconductor holdings. On the fee front, investors get this exposure for just $9 per year on a $10,000 investment -- a fraction of what most actively managed tech funds charge. The ETF has some blind spots. As a fund in the information technology sector, it excludes Amazon and Alphabet entirely, leaving out Amazon Web Services and Google Cloud despite their dominant role in AI. It is also heavily weighted toward Apple, Microsoft, and Nvidia, so weakness in any of these companies could weigh on performance. Moreover, technology-sector drawdowns can be severe. The fund declined more than 50% in 2008 and 30% in 2022. Even so, decades of compounding have more than offset the occasional sharp downturn. The innovation premium The Vanguard Information Technology ETF doesn't need to guess the next AI breakthrough. It owns the companies with the capital, talent, and market dominance to adapt to whatever comes next. Periods of volatility are inevitable, but history shows that technology leaders often emerge from downturns even stronger. For investors willing to ride out the drawdowns, the reward has been decades of market-beating compounding. So, with AI adoption accelerating and the sector's fundamentals in their best shape in years, this Vanguard ETF offers a low-cost way to capture the gains from this platform shift. Do the experts think Vanguard Information Technology ETF is a buy right now? The Motley Fool's expert analyst team, drawing on years of investing experience and deep analysis of thousands of stocks, leverages our proprietary Moneyball AI investing database to uncover top opportunities. They've just revealed their to buy now — did Vanguard Information Technology ETF make the list? When our Stock Advisor analyst team has a stock recommendation, it can pay to listen. After all, Stock Advisor's total average return is up 1,069% vs. just 184% for the S&P — that is beating the market by 884.49%!* Imagine if you were a Stock Advisor member when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $660,783!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,122,682!* The 10 stocks that made the cut could produce monster returns in the coming years. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025 George Budwell has positions in Apple, Microsoft, Nvidia, Palantir Technologies, and Vanguard Information Technology ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Cisco Systems, International Business Machines, Meta Platforms, Microsoft, Nvidia, Oracle, and Palantir Technologies. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. AI Development Is Accelerating: 1 Vanguard ETF to Buy Right Now was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
39 minutes ago
- Yahoo
Nvidia's Trump Tax of Little Worry to Investors Eyeing AI Riches
(Bloomberg) — President Donald Trump's move to extract a 15% sales tax from Nvidia Corp. (NVDA) on certain semiconductors sold in China did nothing to damp investor enthusiasm for the world's most valuable company. The US-Canadian Road Safety Gap Is Getting Wider Sunseeking Germans Face Swiss Backlash Over Alpine Holiday Congestion To Head Off Severe Storm Surges, Nova Scotia Invests in 'Living Shorelines' Five Years After Black Lives Matter, Brussels' Colonial Statues Remain For Homeless Cyclists, Bikes Bring an Escape From the Streets A look at balance-sheet math goes a long way to explaining why. In the first quarter, Nvidia said it sold $5.5 billion in products to China, roughly 13% of its total. The chips exposed to the Trump tax accounted for about 80% of that, or just under $5 billion. That means the Santa Clara, California-based firm could send some $700 million per quarter to the Treasury — hardly chump change. But for a company that churns out $20 billion in profit a quarter and increases sales by a similar amount - a rate of growth it's sustained throughout the AI boom — paying the tax barely registers. 'I don't think it's that big of an issue,' said Larry Tentarelli, founder of Blue Chip Daily. 'If it was their overall revenue base, it would be a big problem. But because China is not the biggest proportion of their revenues, it's a speed bump.' Nvidia shares slipped Monday after the tax was disclosed, then rallied to a fresh record Tuesday in a broad market advance. The chipmaker's shares have doubled since early April, pushing its market value past $4.4 trillion. Similarly, AMD (AMD), which agreed to the same tax, closed at the highest in more than a year on Wednesday, bringing year-to-date gains to 53%. Nvidia reports second quarter earnings on Aug. 27. Analysts expect it will report earnings growth of 44% on a 53% surge in revenue to $45.9 billion. That's not to say the clouds have completely lifted in China. Bloomberg News reported this week that Beijing has encouraged local firms to avoid using Nvidia's chips — a move that could limit sales. And worries abound that chipmakers will increasingly become ensnared in federal trade policy or that China could make a more formal recommendation to ban certain US chips altogether. 'It is a hard game to know how this will play out. I would almost consider the stocks absent this news,' said Michael Matousek, head trader at U.S. Global Investors Inc. 'If you already liked them, there's potential for upside from China, but there are risks this could change again.' None of that, though, seems to register among investors betting that red-hot demand for AI infrastructure will continue to burn. The trend has lifted shares of Nvidia from their April lows alongside Magnificent Seven peers deemed AI winners, including Meta Platforms Inc. and Microsoft Corp. The tax news is 'mostly empty calories,' Citigroup's Christopher Danely wrote in a note this week on AMD. 'We view this as not material given the low margins of these products, and these AI GPUs could be banned in China again.' At Bernstein, analyst Stacy Rasgon worries about the precedent the Trump tax sets. The arrangement 'might raise some money, but doesn't seem to address any strategic issues beyond a grab for dollars,' he wrote in a note published Aug. 11. Regardless, Nvidia shares will rise or fall on its ability to deliver sales of cutting-edge chips, most notably its Blackwell products. 'What's more important is the trajectory of Blackwell and whether or not Blackwell is going to meet or exceed expectations,' said Melissa Otto of Visible Alpha LLC. 'That's what the market has priced in. That's where we see the biggest uplift in demand and growth. And so that is ultimately what is going to drive the earnings expectations and valuation for the stock.' That major question, along with the trade uncertainty and Nvidia's rally do leave the shares exposed to profit-taking ahead of the Aug. 27 report. 'I'm not going to bet on whether this stays a positive,' said Alvin Nguyen, senior analyst at Forrester. 'There have been so many rapid changes, there's still so much uncertainty, and we need to see stability in trade.' Sign up for Yahoo Finance's Week in Tech By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Top Tech Stories Hon Hai Precision Industry Co. posted a better-than-projected 27% rise in profit over the June quarter and projected accelerating sales growth from its key AI server business. China's biggest tech companies are bouncing back after years on the ropes with outsized ambitions to dominate in everything from robots and smart glasses to cheap meals. But investors want them to focus their spending where it counts — AI. Apple Inc. is plotting its artificial intelligence comeback with an ambitious slate of new devices, including robots, a lifelike version of Siri, a smart speaker with a display and home-security cameras. Lenovo Group Ltd. reported better-than-expected profit after companies accelerated PC purchases to get ahead of possible new US tariffs. Earnings Due Thursday Earnings Premarket: CSP Inc. (CSPI US) Earnings Postmarket: Applied Materials Inc. (AMAT US) Digimarc Corp. (DMRC US) Globant SA (GLOB US) —With assistance from Subrat Patnaik and David Watkins. Americans Are Getting Priced Out of Homeownership at Record Rates Dubai's Housing Boom Is Stoking Fears of Another Crash Bessent on Tariffs, Deficits and Embracing Trump's Economic Plan Why It's Actually a Good Time to Buy a House, According to a Zillow Economist The Electric Pickup Truck Boom Turned Into a Big Bust ©2025 Bloomberg L.P. Sign in to access your portfolio
New York Times
39 minutes ago
- New York Times
Why Trump's Pay-for-Play Chips Deal May Not Be the Last
Andrew here. The unusual arrangement between the White House, Nvidia and Advanced Micro Devices to collect 15 percent of the tech giants' revenue on certain chips sold to China continues to raise eyebrows. We dive deeper into that — and look at how such an arrangement might expand to other companies, too. We also share some of your insightful takes on the debate. And don't miss our rundown of who may be starring in what increasingly looks like a reality TV show that could be called 'The Apprentice — Fed Edition,' as we assess the possible candidates for the next Fed chair. More below. 'Rational industrial policy'? Since Inauguration Day, C.E.O.s have made the pilgrimage to the White House to shake hands with President Trump on big-money deals — proof, he says, that 'America is back.' But the business world and Washington are still reeling over one pact in particular: Trump's announcement this week granting the chipmakers Nvidia and Advanced Micro Devices permission to resume selling some powerful semiconductors to Chinese companies in exchange for giving the U.S. government an expected 15 percent cut. The apparent green light alarmed some China hawks and national security experts, who worry it could ultimately harm America's tech industry, and the country. Beyond that, DealBook and others have asked, is this just a one-off business arrangement unique to the giants of the chips industry, or Trump's new rules of global capitalism? Think of it as both, Scott Bessent said. 'I think we could see it in other industries over time,' the Treasury secretary told Bloomberg TV on Wednesday. 'I think right now, this is unique, but now that we have the model and the beta test, why not expand it?' Want all of The Times? Subscribe.
