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BlackRock is the world’s largest asset manager, overseeing $11.5 trillion in client funds. Of this amount, around $3.3 trillion is invested in exchange-traded funds (ETFs) operated by its iShares subsidiary.
With just a few ETFs, investors can easily own pieces of hundreds or thousands of different stocks. This approach is particularly helpful for getting involved in emerging sectors like artificial intelligence (AI), where picking individual winners can be difficult. As the late Vanguard founder John C. Bogle once remarked, “Don’t look for the needle in the haystack, just buy the haystack!”
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iShares currently offers over 1,400 different ETFs. One notable option is the iShares U.S. Tech Independence Focused ETF (NYSEMKT: IETC), which allocates more than one-third of its portfolio to key AI companies.
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Invest Smartly in the AI Revolution
The iShares U.S. Tech Independence Focused ETF invests in companies that contribute significantly to America’s technological independence. This means they generate a large portion of their revenue, production, and technology domestically.
As major tech firms focus on AI, this ETF has become an effective way to track a potential technological transformation, and it is starting to deliver impressive returns.
Holding 117 different stocks, the ETF’s top 10 positions are filled with prominent names in AI. The lead four stocks, in particular, are recognized as leaders in AI hardware and software:
| Stock | Portfolio Weighting | Stock | Portfolio Weighting |
|---|---|---|---|
| 1. Broadcom | 15.7% | 6. Salesforce | 3.7% |
| 2. Amazon | 8.12% | 7. Oracle | 3.02% |
| 3. Nvidia | 8.04% | 8. Apple | 2.51% |
| 4. Microsoft | 7.33% | 9. Alphabet (Class A) | 2.46% |
| 5. Accenture | 3.96% | 10. Motorola Solutions | 2.16% |
Data source: iShares. Portfolio weightings are as of Jan. 2, 2025, and are subject to change.
Broadcom specializes in producing AI accelerators for data centers used by major tech firms, including Alphabet, to enhance their AI capabilities. In 2024, Broadcom’s stock more than doubled, fueled by a remarkable 220% rise in its AI revenue.
On the other hand, Nvidia dominates the AI chip market with its data center GPUs. The company recently launched its Blackwell GPUs, which outperform its earlier Hopper GPUs by offering up to 30 times more processing power. Nvidia’s revenue for fiscal year 2025 is expected to reach $128.6 billion, reflecting a 112% increase compared to the previous year.
Amazon and Microsoft are significant customers of Nvidia, leveraging their cloud services—Amazon Web Services (AWS) and Microsoft Azure—to build AI data centers stocked with GPUs. Both are also incorporating AI into their existing products, creating features to compete with advanced AI systems like ChatGPT.
Besides its top 10 stocks, the iShares ETF includes other leading AI companies such as Meta Platforms, Palantir Technologies, Advanced Micro Devices, and Micron Technology.
Since its inception in 2018, the iShares ETF has achieved an annual return of 20.6%, significantly outpacing the average 13.8% return of the S&P 500 during the same period.
While the iShares ETF isn’t designed to function as a standalone portfolio—due to its concentration in a few stocks which can lead to volatility—it can enhance a diversified investment strategy.
If you had invested $50,000 in the S&P 500 in 2018, it would now be worth about $123,585. However, by allocating 70% to the S&P 500 and 30% to the iShares ETF, your investment would have grown to approximately $141,166.
Consistently achieving annual returns of 20% or more is a challenge for any fund due to the law of large numbers. For perspective, Nvidia has taken 30 years to reach a market valuation of $3.5 trillion. If it were to maintain a 20% growth rate for the next three decades, it would approach a staggering valuation of over $830 trillion.
Given that the total wealth across the globe was estimated at approximately $450 trillion by the end of 2022, such a valuation for Nvidia seems unlikely.
Nonetheless, the AI sector appears poised for prolonged growth. Nvidia’s CEO Jensen Huang anticipates that data center operators will invest $1 trillion over the next four years to upgrade their infrastructure to satisfy the needs of AI developers. Furthermore, PwC predicts that AI overall will…
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Adding an impressive $15.7 trillion to the global economy by 2030, the tech sector continues to attract investor attention. However, caution is advised. While the iShares ETF could be a valuable addition, diversifying investments remains crucial.
Before committing funds to the iShares U.S. ETF Trust – iShares U.S. Tech Independence Focused ETF, consider the following:
The Motley Fool Stock Advisor recently revealed their pick for the 10 best stocks to invest in currently. Notably, iShares U.S. ETF Trust – iShares U.S. Tech Independence Focused ETF did not make the list. The stocks selected are projected to provide substantial returns in the coming years.
Remember when Nvidia was highlighted on April 15, 2005? An investment of $1,000 back then would have grown to an astounding $885,388!*
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Suzanne Frey, an executive at Alphabet, and John Mackey, the former CEO of Whole Foods Market, are board members of The Motley Fool. Randi Zuckerberg, once a director at Facebook and sister to Meta Platforms CEO Mark Zuckerberg, also serves on the board. Anthony Di Pizio does not hold shares in any mentioned stocks. The Motley Fool recommends stocks including Accenture Plc, Advanced Micro Devices, Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Oracle, Palantir Technologies, and Salesforce. They also suggest certain trading options related to Accenture and Microsoft. The Motley Fool adheres to a strict disclosure policy.
The views expressed in this article are solely those of the author and may not reflect the opinions of Nasdaq, Inc.
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