Key Points
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The Vanguard Information Technology ETF (VGT) is the way to invest in the sector as a whole.
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The VanEck Semiconductor ETF (SMH) invests in the narrow sector niche driving the AI build-out.
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The iShares Expanded Tech-Software Sector ETF (IGV) would be the way to take advantage of the unfair beatdown in software stocks.
- 10 stocks we like better than Vanguard Information Technology ETF ›
Believe it or not, at one point in late March, tech was the worst-performing S&P 500 sector year to date. Thanks to a huge second-quarter resurgence fueled by strong corporate earnings and easing geopolitical tensions, tech is back to its familiar spot as one of the best-performing sectors of the first half of 2026. And by a fairly wide margin.
Companies are still investing hundreds of billions of dollars into artificial intelligence (AI) infrastructure. Revenues and earnings related to the build-out have begun reflecting that. Plus, valuations look surprisingly reasonable given the sector’s current growth rate.
Here are three tech ETFs setting up nicely to continue riding the rally.
Vanguard Information Technology ETF
If you want to simply invest in the broad tech sector, the Vanguard Information Technology ETF (NYSEMKT: VGT) is the best way to do it. It’s a fairly standard market-cap-weighted portfolio of tech stocks, but it has the advantage of including a few more small- and mid-cap stocks than many other tech funds.
The investment case for this ETF is the strong earnings and revenue growth happening in the broader sector. Tech has delivered some of the strongest earnings growth over the past 12 months and is expected to continue to do so over the next several quarters. Valuations are fairly reasonable given current growth rates, which creates additional upside potential for investors.
VanEck Semiconductor ETF
The VanEck Semiconductor ETF (NASDAQ: SMH) is where the biggest growth is happening. Semiconductor makers are experiencing huge demand and are likely to continue seeing that for the foreseeable future. Even with the powerful rally in these stocks, the relative value compared to current expected growth rates suggests there’s still upside left.
That being said, I don’t think investors necessarily want to push too heavily into this sector. This portfolio is very concentrated, and chip stocks have experienced a 13% drawdown just in the past three weeks. Any indication that growth rates are topping out could result in a further drawdown. That’s certainly a risk, but I don’t see a sharper correction happening in 2026.
iShares Expanded Tech-Software Sector ETF
Software stocks have largely been left out of the bull market rally. The markets operated under the belief that AI would handle most software development, leaving software companies to slowly drift toward irrelevance. The iShares Expanded Tech-Software Sector ETF (NYSEMKT: IGV) is down 17% over the past year compared to a 39% gain for the Vanguard Information Technology ETF.
But there comes a point where negative sentiment beats a sector down too hard. Software companies will almost certainly not die off. And even if their business models get permanently altered, they’ll probably find a way to pivot or evolve to survive in the current environment.
This is one of the few areas of the tech sector that still has some value. When sentiment is this bad, it’s time to consider dipping your toes into the water.
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David Dierking has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
