Nvidia, Meta, Apple, and Microsoft: A BlackRock ETF's Path to $1 Million by 2040

Investing in the iShares Expanded Tech Sector ETF (IGM) could turn a $200,000 investment into $1 million by 2040, thanks to the growth potential of its top holdings: Nvidia, Meta Platforms, Apple, and Microsoft. These companies are at the forefront of artificial intelligence (AI) innovation, and their success could drive significant returns for investors in the BlackRock ETF.



Nvidia, the largest holding in the iShares ETF, is a key enabler for AI development. Its graphics processing units (GPUs) are widely used in AI model development, and the company's new Blackwell chips are expected to drive strong sales growth in the future. Nvidia's market capitalization has already increased by $3.2 trillion in the last two years, highlighting the company's significant impact on the AI sector.

Meta Platforms, the parent company of Facebook and Instagram, uses AI to power content recommendation engines and help businesses craft engaging ads. The company's Llama large language models (LLMs) are also gaining traction, with CEO Mark Zuckerberg predicting that they could outperform even the best closed-source models from start-ups like OpenAI in 2025.

Apple, with its new Apple Intelligence software, is poised to become the biggest distributor of AI to consumers. The software introduces several new AI-powered features and transforms many old ones, including the Siri voice assistant, which now borrows its knowledge and capabilities from OpenAI's ChatGPT.

Microsoft, through its Azure platform, offers developers access to the computing capacity and LLMs they need to build their own AI software. The company's AI assistant, Copilot, can generate text, images, and even computer code, further cementing its position as a leader in the AI space.

The potential impact of AI on the global economy is significant, with estimates ranging from $7 trillion to $200 trillion over the next decade. This growth is expected to be facilitated by the companies in the iShares ETF, particularly Nvidia, Meta, Apple, and Microsoft, which are at the forefront of AI innovation.

The iShares ETF has delivered a compound annual return of 11% since its inception in 2001, comfortably outpacing the average annual return of 8.5% in the S&P 500 over the same period. However, the ETF has generated an accelerated annual return of 20.3% over the past decade, thanks to the growing adoption of technologies like enterprise software, cloud computing, and now, AI.

The below table shows how long it could take the ETF to turn an investment of $200,000 into $1 million based on a range of potential returns:

Starting BalanceCompound Annual ReturnTime To Reach $1 Million$200,00011%16 Years$200,00015.6% (midpoint)12 Years$200,00020.3%9 Years

Maintaining an annual return of 20% or more over the long term is extremely difficult for any fund, because companies eventually reach the point of saturation in their addressable markets, which makes it harder to continue generating additional growth. However, even if the iShares ETF reverts back to its long-run average return of 11% per year, it can still turn $200,000 into $1 million by 2040.

With that said, AI could be one of the most valuable opportunities in history, so elevated returns certainly aren't out of the question over the next few years. PwC thinks AI will add $15.7 trillion to the global economy by 2030, and a lot of that value will be facilitated by the companies in the iShares ETF. But there is also the possibility that AI fails to live up to the hype, which could erode some of the gains in stocks like Nvidia and trigger a period of underperformance.

In conclusion, the iShares Expanded Tech Sector ETF offers investors a diversified approach to investing in the AI sector, with a focus on Nvidia, Meta, Apple, and Microsoft. While the long-term prospects of these companies are promising, investors should be aware of the risks and potential challenges associated with the AI sector. By maintaining a balanced perspective and staying informed about market developments, investors can position themselves to capitalize on the growth potential of AI while managing risk.