I don't need to tell investors that tech stocks have widely outperformed over the past decade. While it may have begun with software, the market has now rapidly shifted its attention to artificial intelligence, which is evolving at a lightning-fast pace.
The "Magnificent Seven" now consume a large portion of the broader benchmark S&P 500 index and are a driving force behind the index's collective earnings and performance over the past three years.
Image source: Nvidia.
Chip companies and data companies specifically designed to run AI applications have seen their stocks melt up in recent years. While valuations have come into question, even in the event of a significant pullback, tech investors are still likely to have performed well in the long term. If you'd invested $1,000 in the Technology Select Sector SPDR Fund (XLK +0.20%) 10 years ago, here's how much you'd have today.
Crushing the broader market
The XLK holds dominant positions in most of the major tech and AI stocks one would expect, including Nvidia, Apple, Microsoft, and Broadcom, among others. As a result, the XLK has hammered the S&P 500 over the past decade.
As you can see, an investor who allocated $1,000 of capital to the S&P 500 a decade ago would have over $3,270 today, representing a total return of 227%, which is still quite strong. However, had that investor put their money in the XLK, they would have close to $6,500 for a total return of 545%.
