Meet the Unstoppable BlackRock ETF Obliterating the S&P 500, the Nasdaq-100, and the Dow Jones Right Now

Despite a recent bout of volatility sparked by the ongoing geopolitical tensions between the U.S. and Iran, the S&P 500, the Dow Jones Industrial Average, and the Nasdaq-100 indexes are still sitting on spectacular rolling one-year returns of between 26% and 45%.

However, had investors bought the iShares Expanded Tech Sector ETF (NYSEMKT: IGM), they would be sitting on an even greater one-year gain of 62%.

Data by YCharts.

The Expanded Tech Sector ETF is one of 1,700 exchange-traded funds (ETFs) issued by iShares, a subsidiary of the world's largest asset manager, BlackRock. This particular fund aims to give investors exposure to American technology and technology-related companies developing both hardware and software products and services. As a result, it has significant exposure to the artificial intelligence (AI) boom.

Can the ETF continue beating the major U.S. stock market indexes?

Image source: Getty Images.

Loaded with America's leading technology stocks

The iShares Expanded Tech Sector ETF holds 288 stocks across 12 sub-sectors of the technology industry. However, over 30% of its portfolio (by value) is invested in semiconductor stocks, primarily due to the AI industry's insatiable appetite for data center chips and components.

This demand for AI hardware has propelled Nvidia, Broadcom, Advanced Micro Devices, and Micron Technology to a combined market capitalization of $7.7 trillion. All four of them are among the iShares ETF's top 10 holdings:

Data source: iShares. Portfolio weightings are accurate as of April 17, 2026, and are subject to change.

The above 10 stocks have delivered an average return of 126% over the last 12 months, and since they make up more than half of the ETF's portfolio by value, they are a key reason why the fund has crushed the broader market.

Alphabet, Microsoft, and Meta are three of the semiconductor industry's largest customers. Alphabet and Microsoft use AI data center chips and networking equipment to develop their own AI software, but they also rent computing capacity to businesses via their cloud platforms for a fee. Meta, on the other hand, uses AI infrastructure to further develop its Llama models and to improve the AI content recommendation algorithms for its Facebook and Instagram social media platforms.

Apple and Netflix aren't aggressively building infrastructure like their big-tech peers, but they are very active in the AI space. Apple launched a suite of AI features and software apps last year called Apple Intelligence, while Netflix recently announced it will lean into AI more heavily to improve the membership experience on its streaming platform and to help creators produce content.

While the other 278 stocks in the ETF have smaller weightings, there are some very noteworthy names among them. They include tech giants like Cisco Systems, AI giants like Palantir Technologies, and Oracle, software powerhouses like Salesforce and ServiceNow, and cybersecurity titans like Palo Alto Networks and CrowdStrike.

The iShares ETF has a stellar track record against the market

The iShares Expanded Tech Sector ETF has delivered a compound annual return of 11.1% since its inception in 2001, beating the average annual return of 8.5% in the S&P 500 over the same period. The ETF has also generated a significantly higher annual return of 28% over the last three years, which roughly lines up with the AI boom.

It's unrealistic to expect any ETF to produce annual returns of over 20% in perpetuity, but the iShares fund could certainly deliver above-average gains for at least the next few years. According to Nvidia CEO Jensen Huang, data center operators could be spending up to $4 trillion per year on AI infrastructure by 2030 in order to meet the enormous demand for computing capacity from developers.

For perspective, Huang says data center operators used to spend around $400 billion per year on classical computing infrastructure, so the AI opportunity could soon be 10 times that. Companies like Alphabet, Microsoft, and Meta wouldn't spend such astronomical amounts unless they expected a significant payoff over the long term, so the AI software industry could be even bigger than the hardware industry at some point.

As a result, I think AI stocks will continue fueling market-beating returns in the iShares ETF for the foreseeable future, so it probably isn't too late for investors to buy. However, having so much exposure to one segment of the market can be a recipe for volatility, so this ETF should be purchased only as part of a diversified portfolio of funds or individual stocks.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, BlackRock, Broadcom, Cisco Systems, CrowdStrike, Meta Platforms, Micron Technology, Microsoft, Netflix, Nvidia, Oracle, Palantir Technologies, Salesforce, and ServiceNow. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.