Black Rock It manages more than $11.5 trillion in assets on behalf of its clients, making it the largest investment firm in the world. About $3.5 trillion of that is in exchange-traded funds (ETFs) managed by its subsidiary iShares.
ETFs can contain hundreds or even thousands of individual stocks. They can track the performance of a specific index e.g Standard & Poor’s 500Or they can provide exposure to niche segments of the market such as artificial intelligence (AI).
Currently, iShares offers over 1,400 ETFs for investors to choose from. One of them is iShares Technology Expanded Sector ETF(NYSEMKT: IGM)which holds a broad portfolio of 290 technology stocks. Founded in 2001, it has delivered better annual returns (on average) than the S&P 500 since then. That’s why it could outperform the index again in 2025.
Image source: Getty Images.
iShares Expanded Technology Sector European Training Foundation It invests in companies across the technology spectrum, including those in the hardware, software, internet and media sectors. It so happens that many of these companies also become Leaders in artificial intelligencewhich has helped them realize a significant amount of value over the past two years.
Although its portfolio includes 290 stocks, the top 10 positions in the ETF represent 55.2% of its total value, and this list includes some of the biggest names in AI:
Data source: iShares. Portfolio weights as of January 13, 2025.
These stocks returned an average of 65.5% through 2024, outpacing the S&P 500’s gain of 23%. In fact, all but one of them outperformed the S&P last year:
Nvidia stock will likely be a top performer again in 2025 as the company ramps up shipments of new Blackwell graphics processing units (GPUs) for data centers. They are potentially the world’s most powerful chips for developing AI models, and demand far exceeds supply.
Meta could also have another strong year. It plans to release the Llama 4 Large Language Model (LLM), which may be the most advanced in the industry, and investors should also expect new AI features for the Facebook, Instagram and WhatsApp platforms. Meta shares are attractively valued at the moment, so there is plenty of room for upside.
Microsoft and Alphabet will improve their AI models this year. Additionally, both companies should continue to experience strong growth in their cloud computing segments, providing data center compute capacity and access to industry-leading MBAs to their business customers. This could be a source of the rise in its stock prices throughout the year.
Outside the top 10, the iShares ETF holds other popular AI stocks such as Advanced micro devices, Palantir Technologies, Micron technology, Crowd StrikeAnd more.
The iShares Expanded Tech Sector ETF has generated an 11% compound annual return since its founding in 2001, which comfortably beats the S&P 500’s average annual gain of 8.5% over the same period.
However, thanks to the emergence of technologies such as enterprise software, cloud computing and artificial intelligence, the ETF’s compound annual return has accelerated to 20.2% over the past 10 years. This crushes the S&P’s 13.7% annual gain over the same period, and the difference becomes staggering when viewed in dollars:
Opening balance (2015 inclusive)
Compound annual return
Closing balance (2024)
$100,000
20.2% (iShares ETF)
$629,570
$100,000
13.7% (S&P 500)
$361,081
Calculations by author.
While it’s unrealistic to expect any fund to grow 20% annually forever, the AI boom is still in its early stages. Nvidia CEO Jensen Huang estimates that the tech giants will spend a total of $1 trillion upgrading their data centers over the next four years to support demand from AI developers. This would benefit his company, but spending would also flow to other hardware suppliers in the iShares ETF such as Broadcom, AMD and Micron.
Furthermore, analysts at PwC believe that AI overall will add $15.7 trillion to the global economy by 2030. Much of this value will be created by companies in the ETF.
If some of the best-performing stocks from 2024 like Nvidia, Meta, and Broadcom continue to lead the broader market higher this year, it is very likely that the iShares ETF will convincingly outperform the S&P 500 again.
However, it is important for investors to own it as part of a diversified portfolio because there is always a risk that the AI will fail to live up to expectations, which could lead to a period of poor ETF performance.
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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Susan Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anthony DiBizio He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, CrowdStrike, Meta Platforms, Microsoft, Netflix, Nvidia, Oracle, Palantir Technologies, and Salesforce. The Motley Fool recommends Broadcom and recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has Disclosure policy.
