The Vanguard Information Technology Index Fund ETF Shares (NYSE Arca: VGT), down 1.47% on the day, as the week continues to see members like Apple (Nasdaq: AAPL), Nvidia (Nasdaq: NVDA), Microsoft (Nasdaq: MSFT) and Broadcom (Nasdaq: AVGO) reel in the wake of DeepSeeks competitor to ChatGPT. VGT has clearly been caught in the technology sell-off, hovering 4.5% below its 52-week high.
Perfect Storm
Investors are selling and on the sideline due to uncertainty and fear around the broader technology sector. And as the Fed convenes for the first time in 2025, coupled with the new Trump administration, investors have even more reason to feel skittish. This nervousness exacerbated by the DeepSeek shocker in which China’s AI companies seemingly threaten to derail their U.S. competitors, including OpenAI and industry darling Nvidia. However, investors might want to take a step back and consider whether there is a buying opportunity beneath the surface.
Key Points
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A perfect storm of AI fears, Fed uncertainty and a new administration sent The Vanguard Information Technology Index Fund ETF Shares (VGT) tumbling.
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Nvidia is the second-biggest component in the tech-heavy ETF.
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Investors who are bullish on AI might spot a buying opportunity.
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Tech earnings should provide further clarity for investors.
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- The Vanguard Information Technology Index Fund ETF Shares is down over 1% on the day but has recovered from its lows.
- VGT is comprised of big technology companies, including Nvidia, which have been under pressure due to the DeepSeek AI shocker.
- The Federal Reserve is meeting for the first time in 2025, adding to the widespread uncertainty.
Investors who are worried about the future performance of the Vanguard Information Technology Index Fund ETF Shares ETF should remember what they signed up for. With a portfolio comprised of some of the biggest names in both tech and AI, emotions tend to run high. The wins are going to be much greater than average but the lows are also going to be more painful. Volatility is inherent in growth stocks, and that is exactly what VGT is made of.
Nvidia Effect
Nvidia, the second-biggest holding in VGT, shaved $600 billion from its market capitalization so far this week. And yet it is the same company that it was a week ago before the DeepSeek fears surfaced. The same holds true for Apple, Broadcom, etc. With earnings season now underway, these CEOs have the opportunity to remind investors about their dominance in the AI industry and what the emerging rivals from China mean for the market share pie as well as margins. Investors who are in it for the long haul may want to buckle up, as VGT is right in the middle of the tug of war between the bulls and the bears.
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