Vanguard's S&P 500 ETF (VOO +0.28%), the world's largest S&P 500 (^GSPC +0.33%) exchange-traded fund (ETF), hit an all-time intraday high of $716.39 per share on Aug. 13. It's pulled back slightly since then, but it's still risen 12% year-to-date.

VOO is usually considered a safe way to passively invest in the stock market, but should you buy it at these levels? Let's review its long-term growth potential to decide.

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What does VOO own?

VOO tracks the S&P 500, the benchmark index of the 500 largest publicly traded U.S. companies. It houses $1.7 trillion in assets and charges a low expense ratio of 0.03%. Its largest holdings include Nvidia (7.55% of its portfolio), Apple (7.04%), Microsoft (5.36%), and Amazon (4.13%).

VOO charges such a low fee because professional fund managers don't actively manage it. It only passively tracks the S&P 500, which is rebalanced every quarter to always include the top 500 companies in America. So while its investors will never beat the market -- since they're merely mirroring it -- they'll always be invested in the country's largest companies.

That's a smart long-term move, since most actively managed funds and individual stocks can't beat the S&P 500 over the long term. That's why Vanguard's founder, John Bogle, once told investors, "Don't look for the needle in the haystack. Just buy the haystack."

But should you buy VOO today?

Investors who buy VOO today face three near-term challenges. First, the S&P 500 is a market-cap-weighted index, and top tech companies like Nvidia, Apple, Microsoft, and Amazon account for a disproportionate share of its growth relative to more mature companies.

Second, the AI market's rapid expansion is generating strong tailwinds for those top tech stocks, but it's also reducing the S&P 500's diversification and inflating its valuations. If AI spending slows, those top stocks could pull back, weighing on the entire index.

Lastly, the S&P 500 trades at 21 times forward earnings, compared to its average forward price-to-earnings ratio of 17. That elevated valuation could limit its upside, especially if Treasury yields rise, the Fed raises rates, and investors pivot back toward fixed-income plays.

However, the S&P 500 has also generated an average total return of 10% since its inception in 1957. It regularly experienced double-digit drawdowns during those seven decades, but it also richly rewarded buy-and-hold investors. Therefore, VOO is still a great place to park some cash you can afford to set aside for at least a decade. But if you'll need the money within a few months or years, it might be smarter to stick with CDs or T-bills instead.