The tech sector’s exposure to AI makes it a strong performer compared to the S&P 500. AI is increasing demand for semiconductors, benefiting chip makers and suppliers. Investing in AI companies outside the tech sector with the Vanguard S&P 500 Growth ETF is a good option. Nvidia and Broadcom are leading the way in designing cutting-edge AI chips. Amazon, Microsoft, Alphabet, and Oracle are pushing the boundaries of cloud computing.

Taiwan Semiconductor and Intel manufacture chips using equipment supplied by companies like ASML, Applied Materials, and Lam Research. Investing in AI can also be done indirectly through companies utilizing it for efficiency, like Walmart’s AI-powered supply chain optimization. AI-focused ETFs like Vanguard Information Technology ETF, iShares Semiconductor ETF, and Vanguard S&P 500 Growth ETF offer a simple way to invest in a portfolio of companies with AI potential.

The Vanguard Information Technology ETF focuses on the tech sector with high exposure to AI, particularly in semiconductor stocks. The ETF has a low expense ratio of 0.09% and is a cost-effective way to invest in the tech sector. The iShares Semiconductor ETF is ideal for those bullish on semiconductor stocks and has outperformed the S&P 500 in the last five years. It offers exposure to companies not included in the S&P 500.

The Vanguard S&P 500 Growth ETF filters the S&P 500 for top growth stocks, excluding value-focused companies. With a low expense ratio of 0.07%, the ETF is a simple and low-cost way to invest in growth-focused S&P 500 companies. It has a significant portion invested in top growth stocks with AI potential. Investing in top tech stocks through low-cost ETFs may lead to outperforming the S&P 500.

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Read more at Nasdaq: The 3 AI ETF Plays That Could Outperform the Market in 5 Years