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VGT

Why Vanguard's Flagship Tech ETF Might Not Be a Good Investment if You're Interested in AI Stocks

May 09, 2026 — 01:50 am EDT

Written by

Stefon Walters for

The Motley Fool->

Key Points

- Amazon, Alphabet, and Meta Platforms are not in the information technology sector.

- Missing Amazon, Alphabet, and Meta would mean missing critical companies in the artificial intelligence (AI) ecosystem.

- The Nasdaq-100 offers better AI exposure.

- 10 stocks we like better than Vanguard Information Technology ETF ›

Although the technology itself isn't new in itself, the reemergence of artificial intelligence (AI) has taken the world by storm and boosted plenty of tech stocks along the way. Instead of trying to pick a single winner in the AI race, you can benefit from investing in a tech ETF that gives you exposure to many of the AI heavyweights.

Vanguard's flagship tech ETF, the Vanguard Information Technology ETF (NYSEMKT: VGT), is a popular go-to for people wanting to invest in tech stocks, but it might not be the best option if you're looking to invest in AI stocks. Let's take a look at why.

Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »

Image source: Getty Images.

Classifications matter

The stock market is divided into 11 major sectors, including the information technology (tech) sector, which VGT tracks. Here are its top 10 holdings and how much they account for in the ETF as of this writing:

- Nvidia: 18.53%

- Apple: 15.85%

- Microsoft: 10.21%

- Broadcom: 4.38%

- Micron Technology: 2.02%

- Advanced Micro Devices: 1.75%

- Palantir Technologies: 1.74%

- Cisco Systems: 1.65%

- Applied Materials: 1.47%

- Lam Research: 1.45%

The most noticeable thing to me -- aside from three companies accounting for over 44% of the ETF -- is the companies that are not listed in the top 10 holdings. There's no Amazon, Alphabet, or Meta Platforms on the list.

Those are three of the most important and valuable companies in the world, not just in tech. But they're missing because of how they're technically classified, which is based on their main source of revenue.

Amazon's main business is e-commerce, so it's in the consumer discretionary sector; Alphabet mainly deals with search services, so it's in the communication services sector; and Meta operates social media platforms, so it's also in the communication services sector. In reality, all three companies are universally considered tech companies.

What you're missing by not having these companies

All three companies play major roles in the AI ecosystem, so investing in an ETF for AI exposure and not holding them would be doing yourself a disservice.

Amazon (AWS) and Alphabet (Google Cloud) operate the world's largest and third-largest cloud platforms, combining for a 42% market share. Without them (and Microsoft's Azure), the AI ecosystem would be missing critical infrastructure. Meta was vital in creating open-source AI models and recently released its Muse Spark model, which it says puts it on the path toward "superintelligence."

All three companies also own many of the data centers and infrastructure necessary to train and scale AI to the level we see today. Their footprint is only going to get larger, too. This year alone, they're expected to have capital expenditures between $500 billion and $530 billion -- most of which will go toward AI initiatives.

A better option would be to invest in a Nasdaq-100 ETF like the Invesco QQQ Trust ETF (NASDAQ: QQQ), which includes these three companies, as well as other heavyweights like Nvidia, Microsoft, and Broadcom.

Should you buy stock in Vanguard Information Technology ETF right now?

Before you buy stock in Vanguard Information Technology ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Information Technology ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $475,926!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,296,608!*

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