Apple's AAPL recent announcement of a landmark chipmaking agreement, worth more than $30 billion, with Broadcom AVGO has sent ripples through the tech sector, with the latter’s shares climbing nearly 5% on the bourses following the news.
This multi-year deal, which secures Broadcom as a key supplier of critical radio frequency (RF) and custom application-specific integrated circuit (ASIC) chips through 2031, producing over 15 billion U.S.-made chips, underscores the deepening strategic ties between the two tech giants.
For investors looking to capitalize on this powerful partnership without betting on a single stock, technology exchange-traded funds (ETFs) with significant exposure to both Apple and Broadcom offer a diversified path to participate in the potential upside.
But before diving straight into the specifics of these ETFs, it is crucial to understand the strategic rationale behind Apple’s $30 billion investment, how it strengthens both giants alongside the broader tech industry, and why this partnership remains critical amid the rapidly accelerating AI infrastructure build-out, so that investors can make an informed decision.
Rationale and Industry Impact of the $30B Deal
The latest agreement involving the massive $30 billion investment commitment is a strategic masterstroke for both Apple and Broadcom, which will simultaneously bolster the entire U.S. tech industry.
For Apple, the deal marks its largest commitment under its American Manufacturing Program, part of a $600 billion, four-year U.S. investment plan. It ensures a stable, long-term U.S.-based supply chain for critical components like RF filters and wireless connectivity chips, helping mitigate its supply-chain risks amid geopolitical uncertainties.
For Broadcom, the agreement eliminates its single largest long-term structural risk — the possibility of Apple replacing its components with in-house chips. This gives Broadcom long-term revenue visibility and massive cash flow security, freeing up resources to aggressively pursue its fastest-growing opportunity, custom AI accelerators.
Ultimately, the broader tech sector should benefit heavily as this transaction accelerates an end-to-end silicon supply chain within the United States, reducing reliance on foreign fabrication plants.
The Future of the Partnership Amid AI Acceleration
Looking ahead, this partnership is poised to become even more critical as the AI infrastructure build-out accelerates at a breakneck pace. The agreement goes beyond traditional iPhone components; it firmly positions Broadcom as a key partner in Apple's ambitious AI roadmap.
As AI models grow more complex and pivot from training to inference, the demand for specialized, power-efficient silicon will surge. Custom ASICs are highly coveted for this exact transition due to their ability to maximize performance-per-watt for neural network algorithms. This trajectory is validated by Broadcom's proven strategy of providing tailored silicon for hyperscalers like Google, Meta, and OpenAI, cementing its status as a formidable player alongside NVIDIA NVDA in the AI hardware race.
For Apple, this long-term contract secures priority access to next-generation silicon, positioning both tech giants at the vanguard of the AI revolution.
ETFs to Capture the Tech Boom
Considering the aforementioned discussion, rather than picking individual winners in this rapidly evolving landscape, investors can gain diversified exposure through the following ETFs that hold both Apple and Broadcom, as well as other key tech players.
State Street Technology Select Sector SPDR ETF XLK
This fund, with assets under management (AUM) worth $118 billion, offers exposure to 74 companies from technology hardware, storage and peripherals; software; communications equipment; semiconductors and semiconductor equipment; IT services; and electronic equipment, instruments and components industries. NVDA holds the first spot in this fund, with 13.24% weightage. AAPL holds the second spot with 12.67% weightage, while AVGO holds the fourth spot with 4.87% weightage.
XLK has surged 41.1% over the past year. The fund charges 8 basis points (bps) in fees and traded at a good volume of 10.53 million shares in the last trading session. It sports a Zacks ETF Rank #1 (Strong Buy).
iShares U.S. Technology ETF IYW
This fund, with net assets worth $24.62 billion, offers exposure to 149 software, semiconductors, and tech hardware companies in the United States. NVDA holds the first spot in this fund, with 13.10% weightage. AAPL holds the second spot with 12.94% weightage, while AVGO holds the sixth spot with 4.31% weightage.
IYW has soared 39.5% over the past year. The fund charges 38 bps in fees and traded at a volume of 0.43 million shares in the last trading session. It sports a Zacks ETF Rank #1.
iShares Expanded Tech Sector ETF IGM
This fund, with net assets worth $10.34 billion, offers exposure to 296 U.S. and Canadian technology and select communication services companies. AAPL holds the first spot with 8.87% weightage, while AVGO holds the fourth spot with 7.79% weightage.
IGM has soared 39.8% over the past year. The fund charges 39 bps in fees and traded at a volume of 0.33 million shares in the last trading session. It sports a Zacks ETF Rank #1.
Global X PureCap MSCI Information Technology ETF GXPT
This fund, with net assets worth $123.3 million, offers exposure to 87 U.S.-listed information technology companies. NVDA holds the first spot with 19.92% weightage. AAPL holds the second spot with 19.45% weightage, while AVGO holds the fourth spot with 7.40% weightage.
GXPT has rallied 29.6% over the past year. The fund charges 15 bps in fees and traded at a volume of 0.06 million shares in the last trading session. It carries a Zacks ETF Rank #2 (Buy).
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Apple Inc. (AAPL): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Broadcom Inc. (AVGO): Free Stock Analysis Report
State Street Technology Select Sector SPDR ETF (XLK): ETF Research Reports
iShares U.S. Technology ETF (IYW): ETF Research Reports
iShares Expanded Tech Sector ETF (IGM): ETF Research Reports
Global X PureCap MSCI Information Technology ETF (GXPT): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).