<p>Since the start of 2023, the <strong>Vanguard Information Technology ETF</strong> <span class="ticker-mention inline-flex items-center font-bold">(VGT <span class="ml-1 text-green-900">+0.91%</span>)</span> has outperformed the<strong> S&amp;P 500 </strong><span class="ticker-mention inline-flex items-center font-bold">(^GSPC <span class="ml-1 text-green-900">+0.06%</span>)</span> every year and has more than tripled overall, while the broad-market index has roughly doubled.</p>
<p>In 2026, energy was the best-performing sector for the first four months of the year, but tech moved back into the lead on May 29. At that point, tech had a 28.6% total return year to date, compared to 26.8% for energy and 11.3% for the S&amp;P 500.</p>
<p>Here's what's driving the tech sector's returns, and why the Vanguard Information Technology ETF remains one of the best low-cost funds for growth investors to buy now.</p>
<div><img alt="Abstract image featuring interconnected geometric shapes, highlighting the growing importance of big data in artificial intelligence (AI). " width="880" height="440" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NzI1MDMvYWJzdHJhY3QtaW1hZ2UtZmVhdHVyaW5nLWludGVyY29ubmVjdGVkLWdlb21ldHJpYy1zaGFwZXMtaGlnaGxpZ2h0aW5nLXRoZS1ncm93aW5nLWltcG9ydGFuY2Utb2YtYmlnLWRhdGEtaW4tYXJ0aWZpY2lhbC1pbnRlbGxpZ2VuY2UtYWkuanBnJnc9Mzg0MA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NzI1MDMvYWJzdHJhY3QtaW1hZ2UtZmVhdHVyaW5nLWludGVyY29ubmVjdGVkLWdlb21ldHJpYy1zaGFwZXMtaGlnaGxpZ2h0aW5nLXRoZS1ncm93aW5nLWltcG9ydGFuY2Utb2YtYmlnLWRhdGEtaW4tYXJ0aWZpY2lhbC1pbnRlbGxpZ2VuY2UtYWkuanBnJnc9Mzg0MA"/>
<p>Image source: Getty Images.</p>
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<h2>Semiconductors in the spotlight</h2>
<p>The tech sector used to be dominated by systems software, applications software, and hardware and equipment companies. But the artificial intelligence (AI) boom triggered changing of the guard.</p><div><div id="foolcom_sidebar_top_container"><div><div></div><div></div><div></div></div></div></div>
<p>After several years of stellar gains, semiconductor and semiconductor materials and equipment companies now make up a remarkable 43.6% of the Vanguard Tech ETF -- and roughly 17% of the value of the entire S&amp;P 500. The semiconductor industry alone is now more valuable than healthcare and industrials combined.</p><div></div>
<section><div><div><div><small><div>Expand</div></small></div><div><img alt="Vanguard Information Technology ETF Stock Quote" width="64" height="64" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL1ZHVC5wbmcmdz0xMjg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL1ZHVC5wbmcmdz0xMjg"/></div><div><h2>NYSEMKT: VGT</h2><div>Vanguard Information Technology ETF</div></div></div><div><div><div>Today's Change</div><div>(0.91%) $1.14</div><div>Current Price</div><div>$125.33</div></div><div></div></div></div><div><div></div><div><h3>Key Data Points</h3><div><div>Day's Range</div><div>$124.38 - $125.67</div><div>52wk Range</div><div>$76.53 - $125.67</div><div>Volume</div><div>4.4M</div></div></div></div></section>
<p><strong>Nvidia </strong><span class="ticker-mention inline-flex items-center font-bold">(NVDA <span class="ml-1 text-red-900">0.45%</span>)</span> has been a big factor in the tech sector's outperformance, going from a market cap of a few hundred billion dollars at the end of 2022 to over $5 trillion today. <strong>Broadcom</strong> is now firmly in the $2 trillion club, while <strong>Micron Technology</strong> joined the $1 trillion club in late May, and <strong>Advanced Micro Devices </strong>and<strong> Intel </strong>are within striking distance. Those five semiconductor stocks account for 30% of the Vanguard Information Technology ETF, and they're now worth more combined than the combined values of <strong>Apple</strong> and <strong>Microsoft</strong>. At the end of 2022, the sum of those five chip giants' market caps was less than $1 trillion.</p><div><div id="in_line_article_pitch_container"><div><div><div></div></div><div><div></div><div></div><div></div></div></div></div></div>
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<p>AAPL Market Cap data by YCharts.</p>
<h2>An earnings-driven growth story</h2>
<p>Semiconductor stocks have more than made up for the relative underperformance of software stocks. But recent earnings reports from companies like <strong>Snowflake</strong> have rekindled investor optimism about software-as-a-service (SaaS) stocks. Simply buying and holding the Vanguard Information Technology ETF would be a simple yet highly effective way to get exposure to the entire tech sector, regardless of what's driving its growth.</p>
<p>While some tech stock valuations are overextended, the sector as a whole has been backing up its share price outperformance with impressive earnings growth. Nvidia, for example, continues to grow its top and bottom lines at a breakneck pace. And its latest $80 billion stock repurchase program will accelerate its earnings-per-share growth by reducing its outstanding share count. Broadcom is guiding for $100 billion in AI chip sales in its fiscal 2027, and that doesn't even account for its booming AI networking business. Meanwhile, Microsoft sports a forward price-earnings ratio of 26.8, which is incredibly reasonable for a leading tech stock with double-digit earnings growth and high margins. And memory chip powerhouse Micron is trading at just 16.5 times forward earnings.</p>
<h2>An ETF to anchor a growth stock portfolio</h2>
<p>The tech sector remains an impeccable long-term investment because there are so many ways for the players in it to unlock growth. Just in the last decade, themes like consumer electronics, the rise in mobile phone capabilities, SaaS, cloud computing, and AI have been key drivers of the sector's growth.</p>
<p>True, it looks overvalued based on traditional valuation metrics. But that narrative has existed pretty much every year.</p>
<p>Until the sector's earnings growth slows, there's every reason to believe the Vanguard Tech ETF can continue outperforming the S&amp;P 500. And given that the Vanguard Information Technology ETF has an expense ratio of just 0.09% compared to 0.03% for the <strong>Vanguard S&amp;P 500 ETF</strong>, investors incur only 60 cents in extra fees annually for every $1,000 invested, making it a no-brainer buy for risk-tolerant investors.</p><div id="article_pitch_container"><div><div></div><div></div><div></div><div></div><div></div><div></div><div></div></div></div><div id="promobox_container"><div><div></div><div></div><div></div><div></div></div></div>

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<p>The Vanguard Information Technology ETF (VGT) has outperformed the S&P 500 for four consecutive years, driven by a 43.6% allocation to semiconductors like Nvidia and Broadcom. Fueled by AI growth and strong earnings, the sector remains a top investment choice despite valuation concerns. With a low 0.09% expense ratio, VGT offers cost-effective exposure to tech's long-term growth potential.</p>

- Since 2023, the Vanguard Information Technology ETF has outperformed the S&P 500, achieving a 28.6% total return amid a tech sector resurgence.  
- Driven by strong performance in semiconductor stocks, the ETF has significant exposure to companies like Nvidia and Broadcom, which have seen substantial market cap growth.  
- Despite concerns over valuation, the ETF remains attractive due to low fees and impressive earnings growth, suggesting continued outperformance relative to the S&P 500.

Motley Fool

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VG Info Tech

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Meet the Low-Cost Vanguard ETF With 30% Invested in Nvidia, Broadcom, Micron, AMD, and Intel That's on Track to Beat the S&P 500 for the Fourth Consecutive Year