Last week, the Nasdaq-100 technology index officially entered correction territory after declining by more than 14% from its recent record high. The index hosts some of the world's largest technology stocks, particularly those at the forefront of the artificial intelligence (AI) revolution. At least some of these tech stocks will recover from this drop.
Rather than trying to pick the winners and losers during this recovery, investors might want to consider buying a tech-focused exchange-traded fund (ETF) instead. The iShares Expanded Tech Sector ETF (IGM +0.42%) holds 285 stocks, including some of the biggest names in the AI race, so it can offer broad, diversified exposure to this emerging industry.
In fact, based on its track record and its future potential, here's how the iShares ETF could turn an investment of $500 per month into $1 million over the long term.
Image source: Getty Images.
Large holdings in Meta, Apple, Microsoft, and Nvidia
The iShares Expanded Tech Sector ETF has a relatively broad focus. While it primarily invests in the technology sector, it also aims to hold tech-related companies from other sectors like communication services and consumer discretionary. Meta Platforms (META +0.22%) is a good example of a tech company in the communication services sector, and it happens to be the biggest holding in the ETF.
Many of the companies in the iShares ETF have pivoted their focus toward AI, whether they are using the technology to enhance their legacy businesses or specifically developing AI products.
The top five holdings in the ETF represent 39.2% of the total value of its entire portfolio, and they are among the leaders in the AI race. The Top five holdings and their portfolio weighting as of March 13, 2025:
- Meta Platforms: 9.11%
- Apple (AAPL 0.01%): 8.23%
- Microsoft (MSFT 0.60%): 8.20%
- Nvidia (NVDA +2.59%): 8.19%
- Broadcom (AVGO +4.69%): 5.46%
Although Meta Platforms is known for its social networks like Facebook, Instagram, and WhatsApp, it also developed the world's most popular open-source family of large language models (LLMs), called Llama. Those models are at the foundation of a growing list of AI software applications, including Meta's own AI chatbot called Meta AI, which is accessible in all of its social media apps.
NASDAQ: META
Key Data Points
Apple's iPhones, iPads, and Mac computers could be where billions of consumers eventually access AI, thanks to the gradual rollout of the company's new Apple Intelligence software. It transforms the way users create and consume content from images to emails, and it can also help them manage their notifications by learning what to prioritize.
Microsoft, on the other hand, operates the Azure cloud platform, which is where a growing number of businesses access the data center computing capacity and ready-made LLMs they need to create their own AI software. Microsoft also developed an AI assistant called Copilot, which elevates its existing products like Windows, Edge, and 365 (Word, Excel, And PowerPoint).
Nvidia and Broadcom are leading suppliers of AI data center hardware. Nvidia supplies the industry's most powerful graphics processors (GPUs), which are the go-to choice for AI developers. Broadcom makes AI accelerators (a type of chip), which customers can customize to suit their specific development needs. Broadcom also supplies some of the best data center networking equipment.
Outside its top five positions, the iShares ETF holds several other prominent AI stocks, including Alphabet, Oracle, Palantir Technologies, Advanced Micro Devices, and more.
Image source: Getty Images.
Turning $500 per month into $1 million
The iShares ETF has generated a compound annual return of 10.8% since it was established in 2001. But that return accelerated to 19.5% per year, on average, over the last decade, thanks to the spectacular growth of companies in the enterprise software, cloud computing, and AI industries.
This table shows the potential returns an investor could earn over the long term based on three scenarios:
| $500 invested monthly at a compound annual return of ... | Balance after 10 years | Balance after 20 years | Balance after 30 years |
|---|---|---|---|
| 10.8% | $108,714 | $425,836 | $1,355,156 |
| 15.1% (midpoint) | $140,690 | $769,344 | $3,588,404 |
| 19.5% | $185,594 | $1,466,332 | $10,328,241 |
Calculations by author.
It would be unrealistic to expect any fund to deliver an annual return of almost 20% over the next three decades, because the law of large numbers eventually leads to slowing growth rates. For example, more than 3.3 billion people use Meta's social media apps every day. There are only 8 billion people on Earth, and many can't sign up (like babies, or people in China, where Meta's apps are banned), so Meta's pool of new potential users is drying up.
Nvidia faces a similar challenge. Its revenue soared by 114% during fiscal 2025, but that growth is expected to decelerate to 56% in fiscal 2026, and just 23% in fiscal 2027. There simply isn't a very large pool of customers capable of spending tens of billions of dollars per year to build AI data centers, so it would be impossible for the company to maintain its growth rate from last year.
Nevertheless, the iShares ETF could turn $500 per month into $1 million within 30 years, even if its annual return reverts to its long-term average of 10.8%. AI could drive stronger gains over the next few years, not only because hardware spending is still growing, but also because the software side of the industry is still in the early stages of monetization.
That said, it's important to remember that past performance isn't a great predictor of future results. If AI fails to live up to expectations, many stocks in the iShares ETF could suffer a period of sluggish performance, so investors should only buy it as part of a balanced portfolio.
