1 Market-Beating Artificial Intelligence (AI) ETF That Could Turn $250,000 Into $1 Million

The iShares Expanded Tech Sector ETF (NYSEMKT:IGM) has delivered a compound annual return of 10.3% since it was established in 2001, comfortably beating the S&P 500 (SNPINDEX:$SPX), which has generated an average annual gain of 7.8% over the same period (as of this writing).

It's an exchange-traded fund (ETF) that focuses on the broader technology industry, so it has successfully navigated transformational booms driven by the internet, enterprise software, cloud computing, and more. Now, the bulk of the companies that make up its top holdings are laser-focused on developing artificial intelligence (AI), which could be the most valuable opportunity in the tech industry's history.

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Here's how the iShares ETF could turn $250,000 into $1 million over the long term.

Image source: Getty Images.

A diversified way to invest in the AI boom

The iShares Expanded Tech Sector ETF holds 283 different stocks, including most of the major players in the AI race. Its top-five holdings are Microsoft, Apple, Alphabet, Nvidia, and Meta Platforms, which represent a combined 41.7% of the portfolio's value, so the fund is quite top-heavy.

However, the fund also holds a stake in a long list of companies that are successfully deploying AI into their legacy businesses to create new growth opportunities. Some of them include:

Data source: iShares. Portfolio weightings are accurate as of April 17, 2025, and are subject to change.

Netflix operates the world's largest streaming service for movies and TV shows. It uses AI in its recommendation engine to show subscribers the content they are most likely to enjoy, which keeps them engaged for longer periods of time. The company is coming off another quarter of record revenue through the first three months of 2025.

Oracle was founded in 1977 and found early success with its database management software. The company evolved over time to help its business customers capitalize on the internet boom in the early 2000s and the cloud revolution in the 2010s. Now, it operates some of the world's best data centers for AI development, with a customer list that includes industry leaders like OpenAI, Meta Platforms, and Elon Musk's xAI.

Oracle recently placed an order for 30,000 of Advanced Micro Devices' latest AI data center chips, the MI355X, which are expected to rival Nvidia's industry-leading Blackwell chips when they start shipping in the next few months. But AMD's AI opportunity transcends the data center because it also makes some of the most powerful AI chips for personal computers, which could be the industry's next big growth opportunity.

Then there are Palo Alto Networks and CrowdStrike, two of the world's largest cybersecurity vendors. They have woven AI into their flagship products to automate everything from threat detection to incident response, which is critical because modern organizations face a growing number of threats as they shift more of their operations into the digital realm.

Turning $250,000 into $1 million

As I highlighted above, the iShares Expanded Tech Sector ETF has delivered a compound annual return of 10.3% since 2001. However, that annual return accelerated to 18.7% over the past decade thanks to the proliferation of technologies like enterprise software, cloud computing, and now, AI.

The table below shows how long it could take for the ETF to turn a starting balance of $250,000 into $1 million, based on three different scenarios:

Table and calculations by author.

Simply put, investors who park $250,000 into the iShares ETF could find themselves with $1 million within 15 years, even if it reverts back to its long-term average return of 10.3%. But it won't necessarily be smooth sailing, because ETFs geared toward a specific industry like technology can be very volatile.

In fact, the iShares ETF is down 17% in 2025 amid the simmering global trade tensions, which is much worse than the 10% decline in the S&P 500. So, even though the ETF typically beats the index over the long run, steep drawdowns are the price investors will pay for the opportunity to earn those strong returns.

AI could be the biggest tailwind for the tech industry since the iShares ETF was established in 2001. Goldman Sachs estimates it will add $7 trillion to the global economy over the coming decade, and Cathie Wood's Ark Investment Management thinks it can improve labor productivity by an eye-popping $200 trillion by 2030. A lot of that value will be created by the companies in the iShares ETF, so patient investors have a legitimate chance to earn a solid return over the long run.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe, Advanced Micro Devices, Alphabet, Apple, Atlassian, CrowdStrike, Datadog, Docusign, Goldman Sachs Group, Meta Platforms, Microsoft, Netflix, Nvidia, Oracle, and Salesforce. The Motley Fool recommends Palo Alto Networks 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.