$826 Billion AI Market: The Only ETF You Need for Explosive Growth.

The rapid advancement of artificial intelligence (AI) over the past few years is a strong indication that the opportunity is real. Yes, it's still likely the early innings. That's why it makes sense to invest in AI through AI ETFs, which offer diversified exposure with a single ticker symbol. While the global AI market could surpass $826 billion by 2030, it's also still very unpredictable.

Imagine the possibilities of what could happen if artificial intelligence continues to improve over the next couple of decades. Something like humanoid robotics, once only found in science fiction, is quickly becoming a real-world possibility.

There will likely be many busts along the way, and the science behind AI and which companies will ultimately rise to the top of the mountain is likely out of most people's comfort zone. So, if you want explosive growth without the risk and headaches of picking individual AI stocks, listen up.

The Vanguard Information Technology ETF (NYSEMKT: VGT) is for you. Here is why.

Image source: Getty Images.

Why this ETF versus dedicated AI ETFs?

Investors can easily find several dedicated AI ETFs that specifically target AI as a theme. Admittedly, the Vanguard Information Technology ETF, which began trading in 2004, isn't a dedicated AI ETF; it's focused on the broader technology market sector.

But it is an AI ETF in the sense that many of the leading technology companies are also the leading AI players at this point. If you look at any AI ETF, you're likely to find familiar names among its top holdings, like Nvidia, Broadcom, Apple, and Alphabet, to name a few.

These companies either produce the chips that train and run AI models, operate the cloud on which AI runs, or have consumer-facing products and services that AI can reach users through. That's most of the AI opportunity at this point.

Here are the Vanguard Information Technology ETF's top 10 holdings. Sure enough, you'll see several of what many consider top AI stocks currently:

1. Nvidia
2. Apple
3. Microsoft
4. Broadcom
5. Palantir Technologies
6. Oracle
7. Advanced Micro Devices (AMD)
8. Cisco Systems
9. International Business Machines (IBM)
10. Micron Technology

Sure, some smaller AI company could eventually burst onto the scene and become a prominent force in the AI space. But at that point, it would likely end up in the Vanguard Information Technology ETF anyway.

Lastly, the ETF charges a low expense ratio of 0.09%, or $0.90 per $1,000 invested. Many AI ETFs charge much higher fees, which will weigh on your actual investment returns over the long run.

The ETF can deliver explosive growth and returns

As it's over two decades old, the Vanguard Information Technology ETF has a long-standing track record. The tech-driven ETF has outperformed the broader stock market (S&P 500 index) over its lifetime.

VGT Total Return Price data by YCharts.

Why? Technology has continued to play an increasingly prominent role in the modern economy ever since the internet era began.

Investors should always diversify their portfolios across different industries and market sectors. Still, it's hard to deny the increasing role that technology plays in society. Even traditionally non-technical businesses, such as industrial manufacturing, have begun to lean into technology for factory automation and AI to optimize their supply chains.

With AI poised to push the modern economy further into technology, the Vanguard Information Technology ETF is likely to continue generating strong returns.

But be careful, there could be volatility along the way

That said, this ETF -- and technology stocks as a whole -- tend to be volatile. They often command higher valuations for their growth potential, so they fall harder during market downturns.

Below, you can see how the ETF has historically put investors through some stomach-churning declines.

VGT data by YCharts.

There's a good chance investors will see another dramatic decline at some point. There is also some concentration risk in the Vanguard Information Technology ETF, simply because its three largest holdings account for an outsize share of the ETF. That includes:

• Nvidia: 18.2%
• Apple: 14.3%
• Microsoft: 12.9%

Any significant decline in these three stocks will weigh heavily on the ETF's performance. These are world-class companies, but investors should recognize the risk involved with having so much of the ETF tied up in three stocks.

In all, the Vanguard Information Technology ETF is a low-fee way to invest in the AI revolution, and it's definitely worth checking out.

Justin Pope has positions in Alphabet. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Cisco Systems, International Business Machines, Microsoft, Nvidia, Oracle, and Palantir Technologies. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.