ETFs to Capitalize on AI's Growing Momentum in 2025

The AI and tech market is gaining momentum in 2025, with Nvidia's market cap surpassing $4 trillion and the tech sector becoming the largest component of the S&P 500. The US AI market is projected to witness a CAGR of 26.95% from 2025 to 2031, reaching $309.7 billion by 2031. Investors can consider AI-focused ETFs such as iShares US Technology ETF, Fidelity MSCI Information Technology Index ETF, Global X Artificial Intelligence & Technology ETF, iShares Global Tech ETF, and Global X Robotics & Artificial Intelligence ETF.

Nvidia Corp has achieved a remarkable milestone by becoming the first publicly traded company to reach a $4 trillion valuation. This extraordinary achievement underscores the company's dominant role in AI and semiconductors and reflects a historic shift in stock market leadership toward technology.

Since October 2022, Nvidia's stock has skyrocketed by an astonishing 1,350%, with its shares rising about 22% in 2025 alone, significantly outperforming the broader S&P 500's 6% gain. Remarkably, Nvidia added $1 trillion to its market cap in just 13 months, climbing from $3 trillion to $4 trillion [1].

Nvidia now commands a 7.5% weighting in the S&P 500, making it the single largest component of the index. Its influence is even more prominent in tech-focused benchmarks like the Invesco QQQ Trust ETF and the Philadelphia Semiconductor Index. However, its presence is smaller in the Dow Jones Industrial Average, which is weighted by stock prices rather than market value [2].

The $4 trillion club is growing, with Microsoft close behind at approximately $3.7 trillion and Apple in third place at around $3.1 trillion. The rapid ascent of these tech giants shows how they are rewriting the rules of market valuation and dominance [3].

The top seven companies in the S&P 500—Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta, and Broadcom—now account for about one-third of the index's total weight. This growing concentration reflects the increasing centrality of the tech sector in driving market returns and investor sentiment [4].

The technology sector now makes up nearly one-third of the S&P 500's market value, approaching the same proportion it held at the height of the dotcom bubble in 2000. Unlike that era, today's tech surge is backed by real earnings and transformative trends like AI and cloud computing [5].

Nvidia's rise is not an isolated event. Other tech stocks have also delivered impressive gains in 2025. Microsoft is up 19% this year, Oracle has surged 40%, and Palantir has climbed an impressive 88%. These gains underscore the broader strength and investor confidence in the tech sector [6].

Nvidia's rapid rise underscores the increasing importance of AI and semiconductor innovation in shaping future market returns. For investors tracking major indices, Nvidia's performance now has an outsized impact on their portfolios. The company's ascent signals a new era dominated by technology and innovation [7].

For investors looking to capitalize on the AI and tech market's momentum, AI-focused ETFs such as iShares US Technology ETF, Fidelity MSCI Information Technology Index ETF, Global X Artificial Intelligence & Technology ETF, iShares Global Tech ETF, and Global X Robotics & Artificial Intelligence ETF could be worthwhile considerations [8].

References:
[1] https://m.economictimes.com/markets/stocks/news/from-chips-to-charts-nvidias-meteoric-market-rise/not-just-nvidia-tech-rally-broadens/slideshow/122358570.cms
[2] https://www.ainvest.com/news/nvidia-surpasses-4-trillion-market-cap-ai-optimism-2507/
[3] https://cryptonews.com/news/spot-bitcoin-etfs-attract-another-218m-total-net-inflows-top-50b-since-launch/