The iShares Expanded Tech Sector ETF (IGM 0.53%) is an exchange-traded fund (ETF) that offers investors exposure to a diverse portfolio of 283 stocks from the technology and technology-related industries.
Its top 10 holdings feature some of the most dominant names in the artificial intelligence (AI) space, including Nvidia (NVDA 2.77%) and Palantir Technologies (PLTR -0.51%), which have obliterated the broader market over the last five years:
Performances like those have helped the iShares ETF beat the S&P 500 (^GSPC 0.01%) index every year, on average, since its inception in 2001. Going forward, here's how the ETF could turn $1,000 per month into $1 million over the long term.
AI juggernauts, with a splash of diversification
While the iShares ETF holds sizable positions in some of the world's biggest AI companies, its exposure to tech-adjacent companies ensures its eggs aren't entirely in one basket. For example, social media giant Meta Platforms and streaming powerhouse Netflix are in the communications services sector, and both had very strong businesses before AI came along. They are among the top positions in the ETF.
Nevertheless, the iShares ETF is quite top-heavy. Despite holding 283 stocks, its top 10 positions represent 56.7% of the total value of its portfolio:
|
Stock |
iShares ETF Portfolio Weighting |
|---|---|
|
1. Microsoft |
9.22% |
|
2. Nvidia |
9.15% |
|
3. Meta Platforms |
8.56% |
|
4. Alphabet |
7.71% |
|
5. Apple |
6.82% |
|
6. Broadcom |
5.05% |
|
7. Netflix |
3.77% |
|
8. Oracle |
2.47% |
|
9. Palantir Technologies |
2.07% |
|
10. Cisco Systems |
1.89% |
Data source: iShares. Portfolio weightings are accurate as of June 18, 2025, and are subject to change.
As I mentioned at the top, Nvidia and Palantir have been two of the best-performing AI stocks in the world over the last few years. Nvidia continues to experience surging demand for its graphics processing units (GPUs) for the data center, which are the most powerful in the world for developing AI models. The latest 'reasoning' models consume up to 1,000 times more computing capacity than traditional large language models (LLMs), which should support sales of Nvidia's Blackwell and Blackwell Ultra chips for the foreseeable future.
Palantir, on the other hand, is an AI software juggernaut. Its platforms, like Gotham, Foundry, and AIP, help organizations and governments analyze large volumes of data to make more informed operational decisions. The company's revenue grew by 29% last year, but Wall Street's consensus estimate (provided by Yahoo! Finance) suggests that the growth rate could accelerate to 35% in 2025.
One analyst -- Dan Ives from Wedbush Securities -- thinks Palantir's market capitalization could triple to $1 trillion over the next few years. But investors should be wary of the company's high valuation, which is why owning it in an ETF might be a safer strategy than buying the stock outright.
But there are a number of other extremely high-quality stocks among the other 273 holdings in the iShares ETF that aren't solely focused on AI. Besides Meta and Netflix, which I mentioned earlier, they include cybersecurity giants Palo Alto Networks and CrowdStrike, small business software provider Intuit, e-commerce powerhouse Shopify, and cloud observability specialist Datadog.
Image source: Getty Images.
Turning $1,000 per month into $1 million
The iShares ETF has delivered a compound annual return of 10.4% since it was established in 2001, comfortably beating the S&P 500, which delivered an average annual return of 8.3% over the same period. However, the ETF generated an accelerated yearly gain of 18.7% over the last 10 years, thanks to the rapid adoption of technologies like cloud computing, enterprise software, and now AI.
Here's how long it could take to turn a consistent monthly investment of $1,000 into $1 million based on three different average annual returns:
|
Monthly Investment |
Compound Annual Return |
Balance After 10 Years |
Balance After 20 Years |
Balance After 30 Years |
|---|---|---|---|---|
|
$1,000 |
10.4% |
$212,420 |
$807,901 |
$2,485,112 |
|
$1,000 |
14.5% (midpoint) |
$271,224 |
$1,413,253 |
$6,239,726 |
|
$1,000 |
18.7% |
$352,624 |
$2,601,403 |
$16,983,247 |
Calculations by author.
The iShares ETF is unlikely to continue returning 18.7% per year over the long run because the law of large numbers will eventually become a roadblock to growth for some of its biggest holdings. For example, there are 2.35 billion active Apple devices worldwide, so the iPhone maker is running out of consumers in its target market (those with the financial means to buy its products and those of an appropriate age to own them). Similarly, over 3.4 billion people use one of Meta Platforms' social networks every day, and there are only 8.2 billion people on Earth.
However, per the above table, the iShares ETF could still turn $1,000 per month into $1 million in less than 30 years, even if its annual return reverts back to its long-term average of 10.4%. With that said, I think the ETF could deliver above-average returns for the foreseeable future, considering the sheer momentum in the AI space right now.
But even if AI companies lose steam or if the technology fails to live up to expectations, the ETF's diversification could come into play and support its returns.
