Can the Vanguard Total Stock Market ETF Help You Build a Million-Dollar Portfolio by 2050?

The quest for long-term wealth accumulation has always hinged on two pillars: compounding returns and strategic diversification. In an era defined by rapid technological advancement, the Vanguard Total Stock Market ETF (VTSMX) emerges as a compelling vehicle for investors seeking to harness the transformative power of artificial intelligence (AI) while mitigating risk through broad market exposure. With AI projected to reshape global productivity and economic growth through 2050, the question becomes not just whether VTSMX can build a million-dollar portfolio, but how it might outperform alternatives in an AI-driven world.

Historical Performance and Projected Growth

VTSMX has demonstrated resilience and consistency over decades. From 1992 to January 2026, the fund delivered an average annual return of +10.92% along an exponential trendline, a testament to its ability to capture the long-term growth of the U.S. stock market. Recent performance underscores its strength: in 2025 alone, VTSMX returned +16.71%, with projections pointing to a 1-year return of +15.5% and a 3-year average annualized return of +16.3%. These figures align with the fund's historical role as a low-cost, diversified proxy for the total U.S. stock market, capturing gains from both large-cap leaders and small-cap innovators.

AI as a Catalyst for Long-Term Growth

Artificial intelligence is poised to redefine economic growth trajectories. By 2026, AI-driven productivity gains are already contributing meaningfully to U.S. GDP. For instance, AI investments accounted for 30% of U.S. GDP growth in Q2 2025 and 20% in Q1 2025, driven by capital expenditures from hyperscalers like the "Magnificent Seven" (Mag 7) tech companies. These firms-Nvidia, Apple, Microsoft, and others- contributed over 46% of the S&P 500's profit growth in 2026, with their AI-related initiatives projected to deliver 18% net income growth.

Beyond the U.S., AI is reshaping emerging markets (EM). Analysts have raised 2026 earnings per share (EPS) growth estimates for nearly 60% of EM countries, with China, India, and Taiwan positioned to benefit from domestic innovation and global semiconductor demand. This global AI momentum suggests that VTSMX, which includes both U.S. and non-U.S. equities, is uniquely positioned to capture cross-border growth.

The Case for Diversified Index Investing

While the Mag 7's dominance in the S&P 500 has fueled recent market gains, overreliance on a narrow group of stocks poses risks. VTSMX's broad diversification- spanning 98% of the U.S. stock market-mitigates this by spreading risk across sectors and company sizes. For example, while large-cap tech stocks have led AI-driven growth, small-cap and value stocks are expected to benefit from spillover effects, such as infrastructure investments in data centers and telecommunications.

Vanguard's capital markets assumptions highlight this balance. While acknowledging that AI could boost global GDP by $13 trillion by 2030, the firm cautions that current stock valuations reflect high expectations. In a base-case scenario, annualized returns for U.S. equities are projected at 5-7%, with a more optimistic 8-10% possible if AI adoption proves transformative. For VTSMX investors, this suggests a need for patience and discipline, as the fund's long-term trajectory is less susceptible to short-term volatility than concentrated tech bets.

Building a Million-Dollar Portfolio by 2050

To assess whether VTSMX can help investors reach a $1 million portfolio by 2050, consider a hypothetical scenario. Assuming an average annual return of 7% (Vanguard's base-case projection) and a 25-year investment horizon (from 2025 to 2050), an investor would need to contribute approximately $12,000 annually to reach $1 million. If returns rise to 8-10%-a plausible outcome in an AI-driven economy-the required annual contribution drops to $9,000–$7,000. These figures underscore the power of compounding, particularly when paired with consistent, disciplined investing.

Moreover, VTSMX's low expense ratio of 0.16% ensures that more of each dollar invested compounds over time. This efficiency is critical for long-term goals, as even small cost reductions can significantly enhance final portfolio values.

Risks and Considerations

No investment is without risk. Overvaluation concerns persist, as AI-driven optimism has inflated stock prices. Additionally, structural challenges-such as trade tensions or regulatory hurdles- could slow AI adoption. However, VTSMX's diversification reduces exposure to any single risk, and its inclusion of non-U.S. equities provides access to markets where AI growth may outpace expectations.

Conclusion

The Vanguard Total Stock Market ETF offers a compelling path to long-term wealth accumulation in an AI-driven economy. By combining historical resilience, broad diversification, and exposure to AI-led productivity gains, VTSMX positions investors to capitalize on both U.S. and global growth. While risks exist, the fund's low costs and ability to smooth sector-specific volatility make it a robust choice for those with a 25- to 30-year horizon. For investors seeking to build a million-dollar portfolio by 2050, VTSMX is not just a possibility-it's a strategic imperative.