Vanguard VGT ETF: 13.7% CAGR Beats S&P 500 Since 2004
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- Vanguard Information Technology ETF (VGT) has delivered a 13.7% compound annual return since its 2004 launch, outperforming the S&P 500's 10.6% annual gain by 3.1 percentage points over the same period.
- VGT holds 320 stocks across 12 IT subsegments, with 34.4% of assets concentrated in semiconductors, where Nvidia, Broadcom, Micron Technology, and Advanced Micro Devices account for a combined $6.8 trillion in market cap.
- Nvidia CEO Jensen Huang projects data center infrastructure spending could reach $4 trillion per year by 2030 to meet AI computing demand, a trend the article says would lift the ETF's largest chip holdings.
- Palantir Technologies stock has surged 2,200% since the start of 2023, while CrowdStrike has more than quadrupled and Palo Alto Networks has more than doubled in the same window, according to the article.
- Nvidia plans to begin commercial shipments of its next-generation Vera Rubin AI data center chips in the second half of the year, with demand expected to outstrip supply.
- Microsoft and Oracle each have order backlogs worth hundreds of billions of dollars from AI customers awaiting more cloud infrastructure capacity, per the article.
- Microsoft is explicitly noted as the lone laggard among the six highlighted AI stocks, having failed to keep pace with the S&P 500 since the start of 2023.
Why it matters: VGT's 3.1-point annual edge over the S&P 500 since 2004 has compounded into a dramatically larger dollar payout for investors, and with Nvidia's Vera Rubin chips launching in H2 and cloud backlogs in the hundreds of billions, the article argues the ETF's heavy semiconductor and AI-cloud exposure gives it a structural advantage heading into 2026.
