1 Vanguard ETF to Ride the Agentic and Physical AI Revolution in 2025

The technology sector is witnessing the rise of two transformative subsectors that are reshaping the future. Agentic AI, the next evolution in artificial intelligence (AI), empowers machines to make autonomous decisions and proactively complete complex tasks without constant human oversight. Meanwhile, physical AI manifests as advanced robotics systems that can navigate and manipulate the real world with unprecedented precision and adaptability.

However, picking individual winners in these rapidly evolving AI subsectors presents a significant challenge for investors. Hundreds of companies are racing to develop breakthrough technologies in these areas, but success remains uncertain due to various factors.

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A low-cost exchange-traded fund (ETF) is a worthwhile workaround to this problem. This approach provides a balanced strategy to capture the enormous growth potential of software-based agentic AI and hardware-driven robotics companies while managing company-specific risks.

The Vanguard Information Technology ETF (NYSEMKT: VGT) is an optimal vehicle for investors seeking exposure to these transformative trends. With an industry-leading expense ratio of 0.10% -- far below the 0.95% average for similar funds -- this ETF provides cost-effective access to 316 technology companies working at the cutting edge of AI. Let's explore why this Vanguard technology fund deserves serious consideration for forward-thinking investors in 2025.

Building tomorrow's intelligent systems

The fund's largest holdings represent the vanguard of technology innovation. Apple, Nvidia (NASDAQ: NVDA), and Microsoft together comprise over 44% of the portfolio. These technology giants possess the computational resources and financial strength to invest in emerging technologies like agentic AI and advanced robotics.

Furthermore, enterprise software leaders will play a vital role in bringing these next-generation AI applications to businesses. Salesforce and Oracle, both top-10 holdings, sport extensive enterprise customer relationships across multiple industries. Their established platforms could provide natural distribution channels for future AI technologies.

Robotics revolution

Physical AI represents the next frontier in robotics by combining advanced mechanical systems and sophisticated AI. The fund provides exposure to major semiconductor companies, like Nvidia, Broadcom, and Advanced Micro Devices, that develop processors essential for the development of physical AI. These companies represent significant portions of the fund's holdings, with Nvidia alone comprising 15.4% of the portfolio.

The potential market for intelligent robots spans manufacturing, healthcare, logistics, and consumer applications. As these technologies move from research and development into commercial deployment, companies developing both hardware and software components stand to benefit from this emerging technology subsector.

Innovation across platforms

While consumer applications of AI grab headlines, the business-to-business market represents 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 every industry begin adopting both agentic and physical AI solutions.

The adoption curve for these technologies extends beyond traditional tech hubs into mainstream industries. Manufacturing, healthcare, financial services, and retail companies are exploring ways to integrate AI systems into their operations. The fund's diverse mix of technology providers, with their proven track records of enterprise innovation, stands ready to meet this expanding enterprise demand.

A compelling investment case

The Vanguard fund offers investors a front-row seat to the agentic and physical AI revolution through a single, low-cost investment vehicle. The fund's large-cap focus, evidenced by a median market capitalization of $512.2 billion, provides stability while pursuing growth in emerging AI technologies.

While the path to widespread AI adoption may have twists and turns, this fund's diversified approach and focus on established technology leaders help manage risk. As these two transformative AI subsectors move from conception to reality this year, the Vanguard Information Technology ETF provides investors a balanced way to participate in this technological revolution.

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George Budwell has positions in Apple, Microsoft, Nvidia, and 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: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.