Key Points

• The S&P 500 has rebounded to reclaim new highs.

• However, that doesn't mean investors should wait for a pullback.

• Vanguard offers a number of great ETFs for investors to begin investing in right now.

• 10 stocks we like better than Vanguard S&P 500 ETF ›

When the market is on a tear, it's tempting to sit back and wait for a pullback. But smart investors know that the best strategy isn't timing the market -- it's time in the market.

The market hitting new highs actually isn't uncommon. In fact, a J.P. Morgan study found that since 1950, the S&P 500 hit a new high on about 7% of its trading days. Meanwhile, on nearly a third of the days it hit a new high, it never traded below that price again.

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That's why dollar-cost averaging is so important. And one of the best investment vehicles to use this strategy with is exchange-traded funds (ETFs). By consistently investing in high-quality ETFs, regardless of market swings, you give yourself the best shot at building serious long-term wealth.

With some of the lowest expenses in the industry, Vanguard ETFs are a no-brainer place to start. Let's look at three Vanguard ETFs to begin buying into for the long term.

Image source: Getty Images.

1. Vanguard S&P 500 ETF

If you're going to own just one ETF, the Vanguard S&P 500 ETF (NYSEMKT: VOO) is the one. The ETF gives you instant exposure to the 500 largest U.S. companies. That includes the biggest winners of the past decade, including Apple, Microsoft, Nvidia, Alphabet, and Amazon. These five stocks alone make up nearly 25% of the index.

What makes this ETF such a great core holding is how it adapts over time. When winners emerge, they just become a larger part of the index. The index leans into the Darwinian principle of survival of the fittest, letting the strongest stocks lead the way higher while laggards fall by the wayside.

This investment mechanism works and is backed by the Vanguard S&P 500 ETF's strong track record of returns. Over the past 10 years, the ETF has generated an average annual return of 13.6% -- a period that has included both strong bull and bear markets along the way.

As an added bonus, the ETF's expense ratio is just 0.03%. This means most of the index's returns stay in your pocket. If your goal is to build long-term wealth, you won't find a more efficient or reliable option.

2. Vanguard Growth ETF

For investors who want more exposure to the market's top growth stocks, the Vanguard Growth ETF (NYSEMKT: VUG) is a great option. This ETF focuses on large-cap companies with strong earnings and sales growth, and that naturally skews the portfolio toward tech and consumer names. While it officially tracks the CRSP US Large Cap Growth Index, this is essentially the growth side of the S&P 500.

The ETF holds about 165 stocks, so you're still getting diversification, but it's solely focused on large-cap growth stocks. It has many of the same top holdings as the Vanguard S&P 500 ETF, but in a higher concentration. For example, while Nvidia represented a 7.3% position in the Vanguard S&P 500 ETF at the end of June, it was an 11.6% holding in the Vanguard Growth ETF.

With growth outperforming value for a long stretch over the past couple of decades, this ETF has been a strong performer. It has produced an annual average return of 16.2% the past 10 years. That outpaces the broader market and gives you more upside if big tech and other growth leaders keep running. With an expense ratio of 0.04%, it's a cheap way to invest in large-cap growth stocks without having to pick individual names.

If you want to lean into growth, this is a great way to do it.

3. Vanguard Information Technology ETF

If you want to go even deeper into tech, the Vanguard Information Technology ETF (NYSEMKT: VGT) gives you a more concentrated portfolio of the companies helping shape the future. The ETF owns the top players in semiconductors, software, cloud computing, and most importantly, artificial intelligence (AI). With AI changing the world we live in, this is a great way to invest in this trend.

The portfolio is top-heavy, with Apple, Nvidia, and Microsoft making up nearly 45% of its holdings as of the end of June. But the ETF also gives investors exposure to companies like Broadcom, Palantir Technologies, and Advanced Micro Devices in its top-10 holdings, as well. These are some of the top companies that have been leading the charge with AI.

Meanwhile, the ETF's performance has been nothing short of exceptional. Over the past 10 years, it's generated an average return of 21.4% annually. It also has a low expense ratio of just 0.09%. Given its top heaviness and lack of diversification, this would not be the only ETF I'd own, but it's a great way to help potentially juice your returns and beat the market.

Overall, this ETF is for investors who believe the technology tailwinds, especially around AI, aren't slowing down anytime soon.

Should you invest $1,000 in Vanguard S&P 500 ETF right now?

Before you buy stock in Vanguard S&P 500 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Geoffrey Seiler has positions in Alphabet and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, JPMorgan Chase, Microsoft, Nvidia, Palantir Technologies, Vanguard Index Funds-Vanguard Growth ETF, and Vanguard S&P 500 ETF. 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.

Key Points

• The market is reaching new heights, which can make it a fantastic time to invest.

• ETFs are a hands-off investment that can help you build wealth with minimal effort.

• No matter your goals or risk tolerance, there's an ETF for your portfolio.

The S&P 500 (SNPINDEX: ^GSPC) reached a new all-time high in late June, soaring by more than 26% from its low point in April, as of this writing. Many investors are optimistic that the market will continue climbing, making right now a fantastic opportunity to load up on quality stocks.

ETFs are a simple way to build wealth with little effort, but the right investments are key to maximizing your earnings. With the market reaching new heights, these three Vanguard exchange-traded funds (ETFs) could be poised for significant growth.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

1. Vanguard S&P 500 ETF

A staple in many investors' portfolios, the Vanguard S&P 500 ETF (NYSEMKT: VOO) is a rock-solid option both when the market is thriving and during slumps.

The S&P 500 ETF includes all the stocks listed in the S&P 500 index itself. From tech behemoths like Apple and Nvidia to century-old brands like Coca-Cola and Procter & Gamble, the companies within the S&P 500 are among the largest and strongest in the world -- making them more recession-proof than many smaller stocks.

Investing in an S&P 500 ETF is also an easy way to build a diversified portfolio with next to no effort. Because this fund contains hundreds of stocks across all sectors of the market, you're more protected if one or two stocks (or an entire industry) get hit hard during a downturn.

Despite its relative safety, though, this ETF can still generate life-changing wealth. The market itself has historically earned an average rate of return of around 10% per year. At that rate, investing just $200 per month could add up to nearly a quarter of a million dollars after 25 years.

2. Vanguard S&P 500 Growth ETF

If you're looking for the safety of an S&P 500 ETF but with a little more power, the Vanguard S&P 500 Growth ETF (NYSEMKT: VOOG) is a fantastic choice. This fund also tracks the S&P 500, but it only includes the companies with the most potential for growth.

This ETF shares many advantages with the Vanguard S&P 500 ETF, in that all the companies within the fund are among the largest and most powerful in the world -- helping to reduce risk. With 212 stocks across all sectors of the market, it also offers ample diversification.

However, because it focuses more on growth rather than simply following the market, it's also more likely to earn above-average returns. In fact, over the past 10 years, this ETF has earned an average rate of return of nearly 16% per year.

VOO data by YCharts.

At that rate, investing $200 per month for 25 years could add up to around $598,000. Just keep in mind that growth ETFs tend to thrive when the market is surging, but they're often hit harder than S&P 500 ETFs during downturns. The key to success with this type of investment is to hold your investment for several years, at least, to take full advantage of the upswings.

3. Vanguard Information Technology ETF

For those looking to add a powerhouse performer to their portfolio, the Vanguard Information Technology ETF (NYSEMKT: VGT) is a strong investment.

This ETF contains 319 stocks exclusively from the tech sector. Industry-specific ETFs can be a smart way to gain exposure to a particular sector of the market, with less effort than buying individual stocks. Also, when you invest in hundreds of stocks at once, you gain more diversification than you would by investing in just one or two stocks from each industry.

The Vanguard Information Technology ETF has a long history of earning above-average returns. Over the past decade, it's earned an average return of more than 21% per year. If it were to continue earning those types of returns, investing $200 per month would amount to more than $1.3 million after 25 years.

VOO data by YCharts.

Again, though, keep in mind that tech stocks tend to face more severe downturns during periods of volatility. If the market takes a turn for the worse, be prepared to hold your investment until the recovery period. This ETF has a long history of surviving downturns, but maintaining a long-term outlook is key.

Investing in ETFs can help you build life-changing wealth with less effort than buying individual stocks, and right now may be a fantastic time to invest as the market soars. By loading up on quality funds and holding them for the long haul, you could earn more than you might think.

Should you invest $1,000 in Vanguard Information Technology ETF right now?

Before you buy stock in Vanguard Information Technology ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Information Technology ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

Katie Brockman has positions in Vanguard Admiral Funds-Vanguard S&P 500 Growth ETF, Vanguard Information Technology ETF, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

Investing a regular amount of money into the stock market each month can be an excellent way to grow your savings and build up a portfolio that's eventually worth $1 million or more. But it can be challenging to do, especially since you have to ensure you can continue to afford making monthly investments, and then picking which investments to make with that money. Amid volatile economic conditions, that's no easy task.

You can, however, simplify the process by going with some solid exchange-traded funds (ETFs) that can diversify your portfolio and set you up for some great growth opportunities in the future. A couple of low-cost Vanguard ETFs to consider for this purpose include the Vanguard Growth Index Fund (NYSEMKT: VUG) and the Vanguard Information Technology Index Fund (NYSEMKT: VGT).

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Here's why investing $300 per month into either one of these ETFs could put you on track to generating a $1 million portfolio in the future.

Image source: Getty Images.

Vanguard Growth Index Fund

The Vanguard Growth Index Fund is a great, growth-focused ETF you can add to your portfolio. It charges an expense ratio of only 0.04%, which means you don't have to worry about high fees chipping away at your gains.

What's attractive about this fund is that it focuses on large-cap growth stocks. These are the types of investments that can drive long-run returns for your portfolio and make the most of your money. Stocks such as Tesla, Amazon, and Nvidia are all among its top-10 holdings. These are leaders within their respective industries, and their businesses are synonymous with growth. With more than 160 stocks in total, this is a well-diversified ETF to simply buy and hold. It also yields around 0.5%.

Over the past decade, the ETF has achieved total returns (which include dividend payments) of approximately 327%. That averages out to a compound annual growth rate (CAGR) of 15.6%.

But for the sake of being conservative, let's assume that its returns will slow down given how hot the market has been in the past few years and how it's reaching record levels. If the ETF averages a return of about 10% for the very long haul (which is in line with the S&P 500's long-term average), then a $300 per-month investment could grow to more than $1 million after a period of 34 years.

This would require investing in the ETF every month during that time frame. But by doing so, you can put yourself on a path to producing some fantastic returns thanks to the effects of compounding.

VUG Total Return Level data by YCharts.

Vanguard Information Technology Index Fund

As terrific of a growth investment as the Vanguard Growth Index Fund has been in recent years, it still falls well short of the gains the Vanguard Information Technology Index Fund has produced during that stretch. At 543%, its 10-year total returns average out to an annual gain of 20.5%.

That's a mind-boggling return, and it highlights just how impressive the stocks within this ETF have been. There will be some overlap between this fund and the growth ETF, but the big difference is there is heavier exposure to big tech. Nvidia, Microsoft, and Apple account for a combined 45% of the Vanguard Information Technology ETF's total holdings, but they make up just around 32% of the growth ETF. That difference can be substantial over time, especially given how well a massive stock like Nvidia has performed. In 10 years, its returns have been truly exceptional, totaling 28,000%.

Given Nvidia's size today as one of the most valuable companies in the world, odds are its returns will be far more modest over the next decade. While they may still be great, it's probably a good idea to factor in a healthy dose of conservatism with this ETF as well given how much of a boost Nvidia has given it in the past. Even though the ETF is focused on tech and growth, averaging 20% annual returns likely isn't going to be sustainable over the very long haul. The expectation of a 10% return may also be prudent with this ETF to ensure your expectations aren't set too high for future gains.

As with the growth ETF, if you invest $300 per month into this fund, you can also be on the path to a $1 million portfolio. If this ETF continues to outperform the market, however, then it may take less than 34 years to get to $1 million. But by staying the course and investing regularly into this or the growth ETF, you can be in a good position for building up a solid portfolio over the long haul.

The Vanguard Information Technology ETF charges an expense ratio of 0.09%, and while that's a bit higher than the growth ETF's fees, they aren't going to drastically alter your prospects for generating potentially life-changing returns from regularly investing in this fund.

Should you invest $1,000 in Vanguard Index Funds - Vanguard Growth ETF right now?

Before you buy stock in Vanguard Index Funds - Vanguard Growth ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Index Funds - Vanguard Growth ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

Now, it’s worth noting Stock Advisor’s total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Microsoft, Nvidia, Tesla, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool 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.

One of the best things to happen to stock investing is the introduction of exchange-traded funds (ETFs). Instead of having to invest in many different stocks to achieve diversification, investors can invest in a single or a few ETFs and instantly be invested in hundreds or thousands of companies.

Leaning on ETFs doesn't have to mean sacrificing return potential, either. There are plenty of ETFs on the market that historically outperform many top companies. One of those is the Vanguard Information Technology ETF (NYSEMKT: VGT). This tech-focused ETF has the potential to turn monthly investments as low as $100 into $500,000 or more.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

This ETF checks off the tech boxes

If you're looking to add tech stocks to your portfolio, this ETF can be a great starting point. It contains over 300 stocks from various industries within the tech sector, including semiconductors (26.8% of the ETF), systems software (21%), technology hardware (18.8%), application software (15.9%), and IT consulting (3.8%).

The tech sector includes many different industries, so the ETF's diversity even within the tech sector gives you broader exposure to its full potential. You don't want to put all your focus on semiconductors and miss the growth of software, put all your focus on hardware and miss the growth of cloud computing, or put all your focus on IT services and miss the growth of cybersecurity.

How to build a $500,000 portfolio with this ETF

Since its January 2004 inception, this ETF has noticeably outperformed the market (based on S&P 500 returns), up 1,190% compared to 420%. That's an annual average of around 12% versus 8%.

When you look at just the past decade, the ETF's returns have been even more impressive, averaging 19% annual returns.

VGT data by YCharts

Averaging 19% and 12% over the long term is an ideal scenario, but it shouldn't be expected. The market historically averaged around 10% annual returns over the long haul, which is a safer expectation.

In either case, here's how much you could earn from this ETF by investing $500 monthly and averaging different returns:

Data source: Calculations by author. Values are rounded down to the nearest hundred and take into account the ETF's expense ratio.

Even if you don't have $500 available to invest monthly, you can still hit the $500,000 mark by only investing $100. What you don't have in money, you can make up with time and taking advantage of the power of compound earnings.

Data source: Calculations by author. Values are rounded down to the nearest hundred and take into account the ETF's expense ratio.

Past results don't guarantee future performance, so you never want to assume that this ETF (or any stock) will maintain these returns. However, it's positioned to return great long-term value.

This ETF should be a complementary piece to your portfolio

One downside to this ETF is its concentration in Apple, Microsoft, and Nvidia stocks. The three combine to make up over 45% of the ETF. That's a lot for any ETF, but especially one with over 300 companies.

Here are the ETF's top 10 holdings:

Data source: Vanguard. Percentages as of April 30.

Granted, Apple, Microsoft, and Nvidia are some of the world's top companies, but that's still a lot riding on just them. Ideally, this ETF would be a complementary piece to your portfolio, rather than the bulk of it. This is especially true for people invested in the S&P 500, because these companies also make up a good portion of the index.

The tech sector as a whole can be volatile, so the same applies to this ETF. The best you can do is expect it, ignore it, stay consistent, and trust the long-term returns.

Should you invest $1,000 in Vanguard Information Technology ETF right now?

Before you buy stock in Vanguard Information Technology ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Information Technology ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $875,479!*

Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 174% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Stefon Walters has positions in Apple and Microsoft. The Motley Fool has positions in and recommends Apple, Cisco Systems, International Business Machines, Microsoft, Nvidia, Oracle, Palantir Technologies, Salesforce, and ServiceNow. 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.

It looks like artificial intelligence (AI) is more than the latest fad. The technology is becoming an integral part of how people do things, from work to play, offering solutions to simplify complex activities. Many companies are investing billions of dollars into it in their efforts to become leaders in aspects of the industry or to maintain their positions in their established arenas.

Based on various forecasts, AI could become a trillion-dollar industry, and the companies that succeed in leading the charge could create tremendous shareholder value. Naturally, many investors are trying to predict which ones are going to be the winners and allocate their funds accordingly. However, since it's important to diversify your portfolio across many industries, it doesn't make sense for most investors to pick too many AI stocks.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

If you're looking for a way to get exposure to the AI revolution without placing too much money into that single industry, consider buying an exchange-traded fund (ETF) that's focused on AI. That would give you easy exposure to a variety of stocks in a single asset, allowing you to benefit from many winners without overexposing yourself to the space or increasing your risk through a lack of diversification.

There are many AI ETFs to choose from, but I would recommend buying the Vanguard Information Technology ETF (NYSEMKT: VGT) and avoiding the Ark Invest Autonomous Tech and Robotics ETF (NYSEMKT: ARKQ). Here's why.

The ease of indexing

Vanguard offers about 80 different ETFs that suit an array of different investing needs. What unites them is that they're all passively managed, meaning they each track an established index instead of having a fund manager choose the stocks. There are many benefits to this strategy.

First of all, it provides instant and wide diversification. The Vanguard Information Technology ETF tracks the MSCI US Investable Market Information Technology 25/50 Index, which includes 307 small-, medium-, and large-cap companies. It's a weighted index, so larger companies make up higher percentages of its total value. The top three components are Apple, Microsoft, and Nvidia, which collectively account for about 46% of the total.

Image source: Getty Images.

However, because there are so many stocks in the portfolio, the risk from any single company's potentially poor performance is minimized. And index funds don't have to pay highly compensated fund managers to choose stocks which stocks to buy and sell, their fees are much lower than those of actively managed funds. The Vanguard Information Technology ETF has an expense ratio of just 0.09%, which compares quite favorably with the industry average of 0.92%.

Because AI and technology have been huge growth industries, this ETF has delivered fantastic results over the medium term. In fact, it has been Vanguard's best-performing ETF over the past 10 years, with 19.8% annualized gains. AI is still in its infancy, and as the market looks like it's recovering, now could be a great time to take a position.

Risk with low diversification

The Ark Invest Autonomous Tech and Robotics ETF has also done well over the past 10 years, but not nearly as well as the Vanguard ETF.

ARKQ Total Return Level data by YCharts.

It experiences many of the same tailwinds -- and risks -- as the Vanguard fund does in terms of industry growth, but the Ark fund is a riskier investment because it only has 37 components. So when some of them go south, its portfolio will take a proportionally more intense beating. Moreover, in broad market downturns, many traders tend to run to safe stocks. In such times, those value stocks can cushion a portfolio. An ETF that's focused solely on growth stocks is bound to feel more pain in those times, though its relative portfolio diversity will mitigate some of that risk.

The Ark Invest Autonomous Tech and Robotics ETF also focuses more on emerging stocks than market leaders. Its top holdings are -- in sharp contrast to the Vanguard ETF's established giants -- Tesla, Kratos Defense and Security, and Palantir Technologies. These stocks trade at ambitious valuations, which makes them more susceptible to steep drops if the market's mood changes or their business results come under pressure.

Both of these ETFs are riskier than a value-oriented ETF or even an ETF that tracks a broad index like the S&P 500. But over time, they have so far rewarded investors who can handle that risk. If you're ready to invest in the future of AI but are concerned about current market uncertainty, the Vanguard Information Technology ETF looks like a smart way to play it.

Should you invest $1,000 in Vanguard Information Technology ETF right now?

Before you buy stock in Vanguard Information Technology ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Information Technology ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jennifer Saibil has positions in Apple. The Motley Fool has positions in and recommends Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, and Tesla. The Motley Fool 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.

The tech sector has been a market-beating beast in recent years. Tech-heavy exchange-traded funds (ETFs) like the Vanguard Information Technology ETF (NYSEMKT: VGT) and the Invesco QQQ Trust (NASDAQ: QQQ) have delivered annual returns of more than 21% over the last three years. Broad market trackers like the Vanguard S&P 500 ETF (NYSEMKT: VOO) only gained 15.5% per year over the same period. Yes, that's a fantastic return from a historic perspective, but the tech sector offered even stronger gains.

Image source: Getty Images.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

The technology boom has been driven by artificial intelligence (AI) news, starting with the public release of ChatGPT in November 2022. Many leaders in the AI market have soared sky-high, adding fuel to the tech sector's market performance fires, but also making those market darlings a bit expensive.

Fortunately, the market-moving forces left a few top-notch companies behind. I still see several tech stocks with a combination of bright business prospects and modest stock prices. Let's check out a couple of underappreciated bargain-bin tech stocks. This dynamic duo looks ready for a fresh bull run.

1. Criteo

Digital advertising has been a troubled sector since the first signs of an inflation crisis in 2021. Paris-based commerce media specialist Criteo (NASDAQ: CRTO) provides purchase-inspiring ad services to global brands. This focus placed the Parisian company in the epicenter of the inflation-based slowdown -- why invest in lavish marketing campaigns when consumers are pinching pennies and tightening belts?

Criteo's revenues have indeed slumped since then, and so has the stock price. You know what's surging in recent quarters, though? That would be Criteo's free cash flows:

CRTO Free Cash Flow data by YCharts

The cash profits took a temporary dip, but came back stronger, with trailing cash flows reaching an all-time high in May's Q1 2025 report. But Criteo's stock price is down more than 30% in the last quarter, and the shares are trading at the bargain-bin valuation of 11.3 times earnings and 6.6 times free cash flow.

I'm not saying the digital ad market is roaring back to life in the spring of 2025. The political climate may result in another inflation spike, and advertisers are already reducing their ad-spot spending right now. Hence, Criteo's undervalued stock may see more volatility and weakness in the coming months. However, I think the market makers have underestimated Criteo's ability to turn cash profits in a soft market.

The Criteo shares you buy at a discount in this downswing should return to more reasonable valuation ratios someday. At the same time, the company's robust cash generation makes it less vulnerable to short-term financial challenges. You can buy Criteo stock with confidence while it's cheap. This one is poised for great long-term returns, and patience is the greatest Wall Street virtue of them all.

2. Hewlett Packard Enterprise

My next recommendation is more of a household name. Hewlett Packard Enterprise (NYSE: HPE) has been around (in some form) since 1939. As the data center and cloud computing operator of the old HP business, HP Enterprise (aka HPE) plays a serious part in the AI boom.

Indeed, seven out of the 10 most powerful supercomputers today were built by HP Enterprise. Only Chinese rival Lenovo has more systems in the top 500 than HP Enterprise, and nobody can match the total number-crunching performance of this company's ultra-powerful systems. Any company or organization that needs a top-performance system for their AI training and operations is likely to check out HP Enterprise's catalog first.

So I'm talking about an AI powerhouse here. Yet, the stock price has dropped 16% lower year to date while smaller system builders Super Micro Computers (NASDAQ: SMCI) and Dell (NYSE: DELL) are up by 41% and down by just 1%, respectively. Trading at 8.9 times earnings and 14.3 times free cash flow, HP Enterprise looks downright cheap next to these challengers.

HP Enterprise's stock could double or triple in price and still be affordable next to Supermicro or Dell. This could be a great value play on the hardware side of the AI boom.

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Anders Bylund has positions in Criteo, Vanguard Information Technology ETF, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool recommends Criteo. The Motley Fool has a disclosure policy.