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Key Points
The Vanguard Information Technology ETF (NYSEMKT: VGT) has increased by over 143% in the past five years and has experienced an increase of over 1,400% since its launch in 2004. This ETF provides investors with broad exposure to the technology sector, specifically benefiting from the AI boom, as major companies invest billions into AI and related technologies.
As of September 21, 2023, the largest holdings in VGT include Nvidia (17.18%), Microsoft (13.73%), and Apple (13.05%). Nvidia, now the largest stock in the world by market cap at $4.3 trillion, along with Microsoft at $3.85 trillion and Apple at $3.64 trillion, poses significant expectations for future growth. The ETF currently trades at 39 times earnings with a growth rate of approximately 32%.
Analysts believe that while AI could significantly influence various sectors, achieving a 20x return on investment may be difficult due to the already large market caps of these leading companies. For an investor’s $50,000 investment in VGT to turn into $1 million, the ETF would need to appreciate dramatically from its current levels.
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