The iShares Expanded Tech Sector ETF (IGM) and the AI Advantage

The iShares Expanded Tech Sector ETF (IGM), established in 2001, has consistently outperformed the S&P 500, delivering a compound annual return of 10.3%. This impressive performance is attributed to the ETF’s focus on the booming technology sector, particularly in artificial intelligence (AI) advancements.

As an exchange-traded fund, IGM offers a diverse way for investors to gain exposure to the tech industry. The ETF comprises 283 different stocks, with major holdings in leading AI developers like Microsoft, Apple, Alphabet, Nvidia, and Meta Platforms, making up 41.7% of its portfolio value. This top-heavy arrangement signifies a strong belief in the growth potential of AI.

Key Holdings Driving AI Innovations

Microsoft: A leader in AI, driving advancements across various sectors.

Apple: Innovating with AI to enhance user experiences and product offerings.

Alphabet: A pioneer in AI research and applications.

Nvidia: A key player in AI hardware, providing cutting-edge chips.

Meta Platforms: Utilizing AI to revolutionize social media platforms.

The ETF also holds stakes in companies leveraging AI for growth, with diverse portfolio weightings:

Netflix (3.78%): Uses AI in its recommendation engine, boasting record revenue in early 2025.

Salesforce (2.15%): Integrates AI into its CRM tools for enhanced customer engagement.

Oracle (1.89%): Operates top-tier data centers for AI development and collaborates with industry giants.

Adobe (1.38%): Employs AI to elevate creative software capabilities.

Advanced Micro Devices (1.29%): Produces groundbreaking AI chips for diverse applications.

Potential for Substantial Returns

The ETF has accelerated its annual return to 18.7% over the past decade, fueled by AI and related technologies. Here’s how different compound annual returns translate into potential growth for investors:

10.3% annual return: $250,000 turns into $1 million in 15 years.

14.5% (midpoint) return: Achieving $1 million in just 11 years.

18.7% return: Reducing the timeline to 9 years.

Despite its potential for high returns, the tech-focused ETF is subject to volatility. In 2025, it faced a decline of 17%, reflecting global trade tensions, a stark contrast to the S&P 500’s 10% drop.

The Long-Term AI Opportunity

AI is poised to be a transformative force, potentially adding $7 trillion to the global economy in a decade, according to Goldman Sachs. Ark Investment Management predicts a $200 trillion boost in labor productivity by 2030. Companies within the iShares ETF are well-positioned to capitalize on these advancements, promising substantial returns for patient investors.

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Note: This article is inspired by content from https://www.fool.com/investing/2025/04/23/1-market-beating-ai-etf-turn-250000-to-1-million/?source=eptyholnk0000202&utm_source=yahoo-host-full&utm_medium=feed&utm_campaign=article&referring_guid=7ece7b81-e9a7-4278-9f60-564a23e69fff. It has been rephrased for originality. Images are credited to the original source.