Second-quarter earnings season is set to kick off, with investors looking for confirmation that artificial intelligence spending can continue to translate into strong earnings. Rather than trying to predict which individual company will deliver the best results, I’d select two ETFs positioned to benefit from both the AI narrative and broader U.S. economic growth. These two funds are the Vanguard Information Technology ETF (VGT) and the Vanguard S&P 500 ETF (VOO).
While individual earnings reports often generate significant volatility, investors do not necessarily need to guess which company will deliver the biggest surprise. Instead, ETFs offer a way to participate in potential upside while reducing company-specific risk.
Vanguard Information Technology ETF (VGT)
Launched in January 2004, VGT has long served as a way for investors to increase technology exposure in their portfolios. Charging an expense ratio of just 0.09%, the fund spreads its current assets under management of $146.58 billion across 328 holdings, providing a 25.21% year-to-date return.
In the current bull market environment, technology remains the main driver of growth, and in my view this momentum will carry into the next earnings season.
VGT provides concentrated exposure to many of the top names expected to drive market sentiment. Its largest holdings include Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL), and Broadcom (AVGO), all companies at the center of the AI trade.
Top holdings such as Microsoft and Apple are expected to release earnings near the end of the month (July 28th and July 30th, respectively).
With fears surrounding excessive capex, markets will be closely monitoring spending plans, demand for cloud computing, and the effective monetization of AI projects. If technology companies once again exceed analysts’ expectations, VGT is well positioned to benefit thanks to its concentration in some of the sector’s largest winners.
Vanguard S&P 500 ETF (VOO)
While VGT provides targeted exposure to technology, VOO offers a somewhat more balanced way to participate in this earnings season.
The ETF tracks the S&P 500 Index and holds approximately 500 of the largest publicly traded companies in the United States. While VOO’s top sector allocation is in technology (approximately 39%), investors also gain meaningful exposure to financials (11.10%), healthcare (8.28%), and industrials (8.09%).
Companies such as Tesla (TSLA), Alphabet (GOOGL, GOOG), Meta Platforms (META), and Amazon (AMZN) are among the top names to watch in the S&P 500, all expected to release earnings near the end of the month.
Of particular interest, investors will also be watching for updates on Meta’s plans to sell AI compute capacity to external customers. If successful, the initiative could create an additional long-term revenue stream for the company while also helping offset its substantial AI infrastructure spending.
If technology earnings were to disappoint, VOO’s diversification across sectors could serve as a potential hedge. Specific non-tech names to watch include JP Morgan Chase & Co. (JPM), Berkshire Hathaway (BRK.B), and UnitedHealth Group Inc. (UNH). All expected to report earnings from the middle to the end of the month.
| VOO Sector Breakdown | % Allocated |
| Technology | 38.55% |
| Financials | 11.10% |
| Communication | 10.37% |
| Consumer Cyclical | 9.81% |
| Health Care | 8.28% |
| Industrials | 8.09% |
| Consumer Defensive | 4.37% |
| Energy | 3.13% |
| Utilities | 2.10% |
| Basic Material | 1.83% |
| Real Estate | 1.80% |
Why VGT and VOO Work Well Together
Taken together, VGT and VOO create a portfolio that balances growth and diversification. While VGT provides concentrated technology exposure, VOO offers broader exposure to the entire U.S. economy. By allocating to both funds, investors gain access to multiple themes likely to shape this earnings season as well as the years ahead.
Final Takeaway
While no one knows which companies will deliver the biggest surprises this earnings season, investors do not necessarily need to predict the outcome of every quarterly report to position themselves for long-term success.
Combined, VGT and VOO offer an attractive combination of growth potential and diversification. As earnings season unfolds, the two funds provide exposure to both the companies leading the AI trend as well as the broader U.S. economy.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks