The technology sector is seeing the rise of two transformative subsectors that are reshaping the future. Agenttic AI, the next evolution in artificial intelligence (AI), enables machines to autonomously make decisions and proactively complete complex tasks without continuous human supervision. Physical AI, on the other hand, manifests itself as advanced robotic systems that can navigate and manipulate the real world with unprecedented precision and adaptability.
However, picking individual winners in these rapidly evolving AI subsectors poses a significant challenge for investors. Hundreds of companies are competing to develop breakthrough technologies in these areas, but success remains uncertain due to a variety of factors.
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Low-cost exchange-traded funds (ETFs) are a valuable workaround to this problem. This approach provides a balanced strategy to capture the enormous growth potential of software-based agent AI and hardware-driven robotics companies while managing company-specific risks.
Vanguard Information Technology ETF (VGT 1.86%) It’s the perfect vehicle for investors seeking exposure to these transformative trends. With an industry-leading expense ratio of 0.10%, which is well below the 0.95% average for similar funds, this ETF provides cost-effective access to 316 technology companies operating at the cutting edge of AI. I will. Let’s explore why this Vanguard Technology Fund deserves serious consideration for forward-thinking investors in 2025.
Build tomorrow’s intelligent systems
The fund’s largest holdings represent pioneers of technological innovation. apple, nvidia (NVDA 4.45%)and Microsoft together account for more than 44% of the portfolio. These tech giants have the computational resources and financial power to invest in emerging technologies such as agent AI and advanced robotics.
Additionally, enterprise software leaders will play a critical role in bringing these next-generation AI applications to their businesses. Salesforce and Oracle are both top 10 holdings and boast extensive enterprise customer relationships across multiple industries. The platform they have established could provide a natural distribution channel for future AI technologies.
robot revolution
Physical AI represents the next frontier in robotics by combining advanced mechanical systems with sophisticated AI. The fund provides exposure to leading semiconductor companies such as Nvidia, Broadcom, and Advanced Micro Devices that develop processors essential to the development of physical AI. These companies make up the majority of the fund’s holdings, with Nvidia alone accounting for 15.4% of the portfolio.
Potential markets for intelligent robots span manufacturing, medical, logistics, and consumer applications. As these technologies move from research and development to commercial deployment, companies that develop both hardware and software components will benefit from this emerging technology subsector.
Innovation across the platform
While consumer applications of AI grab the headlines, the B2B market presents an equally significant opportunity. The fund’s holdings span the entire enterprise technology stack, from cloud infrastructure to specialized business applications. This positioning allows investors to capture value as companies across all industries begin to deploy both agent and physical AI solutions.
The adoption curve for these technologies extends beyond traditional technology hubs and into mainstream industries. Manufacturing, healthcare, financial services, and retail companies are looking for ways to integrate AI systems into their operations. The fund’s diverse mix of technology providers has a proven track record of corporate innovation and is poised to meet this growing corporate demand.
Attractive investment case
Vanguard funds give investors a front-row seat to the agentic and physical AI revolution through a single, low-cost investment vehicle. With a median market capitalization of $512.2 billion, the fund focuses on large-cap stocks, providing stability while pursuing growth in emerging AI technologies.
The path to AI adoption may have its ups and downs, but the fund’s diversified approach and focus on established technology leaders will help manage risk. As these two transformative AI subsectors move from idea to reality this year, the Vanguard Information Technology ETF offers investors a balanced way to participate in this technology revolution.
George Budwell has positions in Apple, Microsoft, Nvidia, and the Vanguard World Fund-Vanguard Information Technology ETF. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Microsoft, Nvidia, Oracle, and Salesforce. The Motley Fool recommends Broadcom and recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
