Should You Buy the Vanguard Information Technology ETF During a Nasdaq Correction? History Gives a Clear Answer
I The Nasdaq-100 The index usually performs better than different indices such as S&P 500 (SNPINDEX: ^GSPC) because nearly 60% of its portfolio is parked in high-growth technology stocks. But that could be a double-edged sword, because the Nasdaq recently fell 12% from its highs during a broader market selloff, while the S&P fell 9%.
Many investors have reduced exposure to the stock amid rising economic uncertainty, fueled by ongoing political tensions in the Middle East that have sent oil prices soaring. But if I look back throughout history, stock markets have probably been great buying opportunities, especially in the high-growth technology sector, which often returns spectacular returns.
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I Vanguard Information Technology ETF (NYSEMKT: VGT) is an exchange-traded fund (ETF) that invests exclusively in the information technology sector. Could it be the end of long-term buying during the Nasdaq-100 correction?
America is home to 10 companies valued at $1 trillion or more, and four of them are from the information technology sector alone. They include:
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Nvidia (NASDAQ: NVDA): $4.6 trillion.
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an apple (NASDAQ: AAPL): $3.8 trillion.
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Microsoft (NASDAQ: MSFT): $2.8 trillion.
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Broadcom (NASDAQ: AVGO): $1.8 trillion.
The Vanguard Information Technology ETF has 318 stocks, but the four names above have a high value of 48.6% of the value of the entire portfolio, which gives them a significant influence on its performance.
|
Stock |
Vanguard ETF Portfolio Weighting |
|---|---|
|
1. Nvidia |
18.06% |
|
2. An apple |
15.83% |
|
3. Microsoft |
10.39% |
|
4. Broadcom |
4.34% |
Data source: Vanguard. Portfolio estimates are accurate as of Feb. 28, 2026, and are subject to change.
Those four stocks have delivered an average return of more than 1,500% over the past decade, and since the Vanguard ETF has given them higher weightings than the S&P 500 and Nasdaq-100, it’s no surprise that the fund has beaten both indexes over that period.
Nvidia, Apple, Microsoft, and Broadcom are likely to continue to deliver strong returns given their significant role in the artificial intelligence (AI) industry, but many other information technology stocks also have the potential to make significant contributions to the Vanguard ETF going forward.
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Micron technologywhich is one of the world’s leading suppliers of high-bandwidth memory (HBM) for data centers. Its new HBM4 solution will power Nvidia’s latest Vera Rubin AI chips.
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Palantir Technologieswhich has developed a series of AI-powered platforms designed to help businesses and government agencies extract maximum value from their internal data. Its stock isn’t cheap following its 1,700% gain since the start of 2023, but it’s full of long-term potential.
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The Oraclewhich is building some of the fastest and most cost-effective AI data centers in the industry. Despite concerns about the company’s growing debt, it can generate revenue growth thanks to an impressive customer list, which includes OpenAI, Meta Platformsand Elon Musk’s xAI.
Volatility is a normal part of the investment journey. Over the past 26 years alone, the Nasdaq-100 has experienced less than five bear markets (down 20% or more). Each was caused by a completely different economic shock. There was the bursting of the dot-com tech bubble in 2000, the global financial crisis in 2008, the COVID-19 pandemic in 2020, inflation in 2022, and the Trump administration’s “Independence Day” tariffs in 2025.
This sharp decline is the price of acceptance for the opportunity to gain wealth-building profits over time. On that note, the Vanguard Information Technology ETF has delivered a compound annual return of 13.5% since its inception in 2004, even after accounting for all the sell markets, corrections, and bear markets along the way.
Industries like AI can remain highly supportive of strong returns in the tech sector from recent market selloffs. Before the AI boom, data center operators were spending about $400 billion a year on legacy computing infrastructure. According to Nvidia’s CEO Jensen Huang, those employees may spend a lot of money 10 times more — $4 trillion a year — on AI infrastructure by 2030, to support the growing demand for computing capacity.
But even if the AI boom is slow, emerging industries such as autonomous vehicles, robotics, and quantum computing could take over as important sources of demand for semiconductor hardware. That means Nvidia, Broadcom, Micron, and Advanced Micro Devices could have long roads to growth from here, which bodes well for the Vanguard ETF.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Advanced Micro Devices, Apple, Broadcom, Meta Platforms, Micron Technology, Microsoft, Nvidia, Oracle, and Palantir Technologies and is short shares of Apple. The Motley Fool has a policy of disclosure.
Should You Buy the Vanguard Information Technology ETF During a Nasdaq Correction? History Gives a Clear Answer was originally published by The Motley Fool
