Meet the Low-Cost Vanguard ETF With 26.2% Invested in Nvidia and Alphabet, While VOO Has Just 13.4%.

Nvidia (NASDAQ: NVDA), Apple (NASDAQ: AAPL), and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) are the three most valuable companies in the world and dominate the S&P 500 with a combined 20.4% weighting. So buying the Vanguard S&P 500 ETF (NYSEMKT: VOO), which tracks the index, is a straightforward, low-cost way to invest in such mega-cap tech stocks -- especially considering the ETF has a 0.03% expense ratio, or just three cents for every $100 invested.

However, investors looking for outsize exposure to Nvidia and Alphabet may want to consider the Vanguard Russell 1000 Growth ETF (NASDAQ: VONG) instead of the Vanguard S&P 500 ETF. The growth ETF is based on the Russell 1000 index -- which includes the 1,000 largest U.S companies by market capitalization.

Here's why Nvidia and Alphabet are great buys now, and why the Russell 1000 Growth ETF is so heavily invested in them.

Image source: Getty Images.

Earnings-driven growth stories

Despite being completely different businesses, Nvidia and Alphabet have similar investment theses. Nvidia is growing revenue rapidly and maintaining high margins as it returns boatloads of free cash flow (FCF) to shareholders through buybacks and a 2,400% increase in its dividend. It just reported second-quarter fiscal 2027 results, with revenue more than doubling year over year. And already, Nvidia is forecasting a 70% increase in fiscal 2028 revenue despite increasingly difficult comps from fiscal 2027.

Nvidia has transformed into a high-margin cash cow and is no longer a growth stock valued entirely on what it could do years from now. Rather, Nvidia has grown into its valuation because it has transformed into the second most profitable company in the world -- right behind Alphabet and ahead of Amazon, Microsoft, Apple, and Saudi Arabian Oil.

GOOGL Net Income (TTM) data by YCharts

Alphabet is also generating consistent growth even as it invests aggressively in artificial intelligence. Its FCF has declined due to higher spending, but Alphabet is unique in that it has exposure to multiple links along the artificial intelligence (AI) value chain. Alphabet has Google Search, the Gemini frontier models, Google Cloud, YouTube, Android, Google Pixel and other devices, Waymo, is a leader in quantum computing, and more. In this vein, it remains a balanced bet on AI, with exposure to AI infrastructure, generative AI, agentic AI, and edge AI through use cases like self-driving cars.

In addition to their profitability and high gross margins, Nvidia and Alphabet are similar in that they are compelling values, with Nvidia trading at a forward price-to-earnings ratio of 23.8 and Alphabet at just 16.5.

A growth ETF unlike any other

Nvidia and Alphabet check the boxes of excellent growth stocks to buy now because they have industry-leading, high-margin business models and aren't overpriced. They are also by far the largest holdings in the Vanguard Russell 1000 Growth ETF, with Nvidia at 14.5% and Alphabet at 11.7% -- significantly higher than Apple's 7.5% weighting, even though Apple has a higher market cap than Alphabet.

The reason Nvidia and Alphabet are so highly weighted is because of the unique way FTSE Russell classifies components of the Russell 1000 Growth index and the Russell 1000 Value index. Some stocks -- like Nvidia, Alphabet, Broadcom, Tesla, Micron Technology, and Advanced Micro Devices -- are pure-play growth stocks, whereas Berkshire Hathaway, JPMorgan Chase, ExxonMobil, and Johnson & Johnson are pure-play value stocks. However, some key components like Amazon, Apple, Microsoft, and Meta Platforms are holdings in both indexes.

This split causes the Vanguard Russell 1000 Growth ETF to have outsize positions in mega-cap companies classified solely as growth stocks -- such as Nvidia and Alphabet. As you can see in the following table, some noteworthy pure-play growth stocks have roughly double the weighing in the Vanguard Russell 1000 Growth ETF than the Vanguard S&P 500 ETF.

Data source: Vanguard.

A dynamic growth ETF with low fees

The Vanguard Russell 1000 Growth ETF is a good buy for investors looking for outsize exposure to Nvidia, Alphabet, and semiconductor stocks. The ETF charges a 0.06% expense ratio, which is still dirt cheap, since that's just 60 cents per $100 invested.

However, investors should be aware that the Russell 1000 Growth index's semi-annual reconstitution could dramatically shake up the ETF's composition if the index decides that Nvidia and Alphabet should have split weightings in both the growth and value indexes. If that were to happen, they would lose their dominant weightings in the Vanguard Russell 1000 Growth ETF.

Add it all up, and the Russell 1000 index's split methodology makes the Vanguard Russell 1000 Growth ETF a good buy for investors targeting today's leading growth stocks rather than companies whose rapid growth periods may be in the rearview.

JPMorgan Chase is an advertising partner of Motley Fool Money. Daniel Foelber has positions in Broadcom and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Berkshire Hathaway, Broadcom, JPMorgan Chase, Meta Platforms, Micron Technology, Nvidia, Taiwan Semiconductor Manufacturing, Tesla, and Vanguard S&P 500 ETF. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.