It can be challenging for active managers to top—or should I say keep up with—the S&P 500 consistently. But what about various market indices that have outpaced it steadily through the years, such as the index exchange-traded funds (ETFs) that follow the tech-heavy Nasdaq 100?

In most years (especially up years), the Nasdaq 100 stood that much taller than the S&P 500, thanks in part to beefier gains from the tech sector. But just because the Nasdaq 100 tends to outrun the market on the way up doesn’t mean it’ll do so moving forward, especially if tech goes from boom to bust suddenly.

In this piece, we’ll determine whether it’s a better idea to look to a tech-heavier, gain-heavier (at least of late) index in the Invesco QQQ Trust (NASDAQ:QQQ), which follows the Nasdaq 100, or the Vanguard Total Stock Market Index ETF (NYSEARCA:VTI), a popular, broader alternative to the S&P 500.

Invesco QQQ Trust (QQQ)

Indeed, there’s likely a heck of a lot more artificial intelligence (AI) hype priced into the tech-heavy QQQ relative to the S&P 500 or the broader total market index funds out there. And while a higher multiple on your average holding could be worth paying if mega-cap tech’s hefty AI-related capex accompanies a solid return to investment in the near future, investors shouldn’t forget they also stand to profit from the AI revolution from broader market exposure.

In many ways, the traditional companies outside of tech are putting their tech caps on. Indeed, many of them may have hired a great deal of tech talent in recent years, given all there is to gain from integrating AI into one’s business. In any case, I find it likely that many such non-tech firms don’t yet have the AI premium attached to them at current levels, making them potential beneficiaries of multiple expansion should their AI strategies translate into some bigger-than-expected gains in the near term.

At the time of writing, the QQQ is around 30% pricier, currently boasting a price-to-earnings (P/E) multiple of around 35 times, far higher than the VTI or most other ETFs that have significant overlap with the S&P 500. Meanwhile, the VTI goes for a more palatable but still somewhat expensive 27.2 times P/E.

The higher multiple on QQQ could mean more pain (remember how unkind the 2022 sell-off was to the QQQ vs. the VTI?) should investors become less willing to pay a premium for tech and AI exposure, especially if the next DeepSeek—a powerful low-cost AI model—ends up coming from out of left field, surprising us all and causing a further shock to the AI gainers that have pulled the market higher in the past two years.

While I do find the QQQ to be a solid basket of innovative firms that will do well in the next decade as they seize opportunities in AI and whichever technology follows (to many, it’s quantum computing). That said, I don’t think the QQQ should form the bedrock of one’s portfolio. Instead, I view it as a nice complement to a more broad-based and diversified portfolio.

Vanguard Total Stock Market ETF (VTI)

The Vanguard Total Stock Market is likely a better bet for investors who want to do well over time but do not want to stand directly in harm’s way should a bursting of the AI bubble happen at some point. DeepWater Asset Management’s Gene Munster is a bull on the AI boom, but even he acknowledges that it’ll probably end in a bubble that could burst in as little as two to three years.

Right now, he’s looking at 2027 as the year AI stocks take a big spill. And when the time comes, the VTI may not feel as much of an impact. However, shares could feel some of the shockwaves, given the index’s modest but still remarkable exposure to tech stocks, specifically those with ample AI spend.

In short, investors shouldn’t expect the QQQ and other Nasdaq 100 ETFs to beat the S&P 500 forever. If history repeats itself and the AI trade ends the way the internet boom did, perhaps more cautious investors would be better off buying and holding the VTI. Personally, I view DeepSeek’s AI breakthrough as a sign that tech firms must pivot or run the risk of having Wall Street turn its backs on them at some point down the line.

As the more diversified (thousands of stocks), cheaper (0.03% expense ratio vs. 0.20% for the QQQ), and more popular option, I’d say the VTI is the better option for the bedrock of most investor portfolios. That said, I’m not against sprinkling some QQQ in it as well for the younger investors out there who are willing to pay a premium for a better seat to the AI show. Perhaps an ideal combo would be a VTI-heavy fund with a 10-20% allocation to the QQQ.

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