The Best AI ETF to Invest $500 in Right Now

Key Points

• Businesses are investing huge amounts of capital to position themselves to be leaders in the AI race.

• This popular ETF owns high-quality technology companies, and its past performance is impressive.

• Investors must set realistic expectations, as returns going forward could come down.

• 10 stocks we like better than Invesco QQQ Trust ›

Some estimates believe the advent of artificial intelligence (AI) will add trillions of dollars to the global economy in the long run. Investors might have disregarded this technology a couple of years ago, but it can no longer be ignored today.

Investors who want to perform well over the long term probably need to have some exposure in their portfolios to the powerful AI trend. Luckily, you don't need to spend time trying to predict which stocks will turn out to be winners. There's a top AI exchange-traded fund (ETF) to invest $500 in right now.

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Powering your portfolio with AI

The Invesco QQQ Trust (NASDAQ: QQQ) is a wonderful choice if you're looking for exposure to AI. This ETF tracks the performance of the Nasdaq-100 index.

However, it's important to know exactly what's in the portfolio. There is a heavy concentration at the top. The "Magnificent Seven" represents a significant 44% of the asset base. Nvidia, Microsoft, and Apple are the three biggest positions.

The top holdings in the Invesco QQQ Trust all benefit from various secular trends. But they are generally all investing aggressively in the AI boom. For instance, the major cloud providers, including Microsoft, Amazon, and Alphabet, are collectively planning to spend nearly $300 billion on capital expenditures just in 2025.

By owning this ETF, investors can have peace of mind that their portfolios are adequately covered. That's because all parts of AI are taken care of, from research and infrastructure hardware to cloud platforms and user-facing apps.

Stellar track record

Besides giving investors the right exposure to AI, the QQQ's performance is another reason this is a solid choice. In the past decade, it has generated a total return of 504% (as of Sept. 10). Had you invested $500 in the ETF 10 years ago, you'd have over $3,000 today. It has clearly worked out extremely well in the past, as the track record of compound capital is stellar.

This gain comes up well ahead of the widely followed S&P 500. The benchmark of 500 large and profitable businesses has produced a total return of 300% in the past decade.

Investors may think that they need to pay top dollar for their funds to be managed well to achieve huge returns, but the Invesco QQQ Trust bucks this trend. Investors only have to pay a 0.2% expense ratio when owning the ETF. It's hard to beat this deal in the financial markets.

Thinking about returns going forward

It would be amazing if the QQQ could mimic its trailing-10-year performance over the next decade. That outcome could happen. In the past, the combination of low interest rates for a lot of the time, the monster success of the leading tech companies, and more money flowing into passive investment vehicles has contributed to this ETF's success.

These same factors could have a huge impact as we look out to 2035 and beyond. And that would bode extremely well for investors. It's easy to remain bullish, even though the QQQ trades in record territory.

However, it's also a good idea to temper expectations. It seems that a lot of experts and analysts are worried about the market's valuation these days. Lofty expectations can lead to a correction if businesses don't continue to exceed forecasts. This can present a headwind to strong returns.

These are the things that investors should always keep in mind. But when it comes to betting on AI, the Invesco QQQ Trust is the best ETF to put $500 in today.

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Neil Patel has positions in Invesco QQQ Trust. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool 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.