Why the Betashares Nasdaq 100 ETF could be the best way to capture the AI boom

Picking individual winners in the artificial intelligence revolution is a difficult thing to do.

However, there have been success stories.

Nvidia has already surged more than 1,000% in two years.

What’s more, Microsoft, Alphabet, and Meta Platforms have each delivered extraordinary returns as AI spending accelerates.

But Australian investors may be feeling slightly left on the sidelines.

The Betashares Nasdaq 100 ETF (ASX: NDQ) offers a different approach: instead of betting on a single company, it gives Australian investors exposure to 100 of the world’s most powerful technology businesses in a single ASX trade.

What NDQ actually holds

NDQ tracks the Nasdaq 100 Index, which comprises 100 of the largest non-financial companies listed on the Nasdaq exchange.

Its top holdings read like a who’s who of the global technology landscape, including Microsoft, Nvidia, Amazon, Alphabet, Micron, and Broadcom.

These companies are among the most profitable companies ever created.

Each has dominant market positions, enormous cash flows, and the financial firepower to lead the AI buildout for years to come.

Together, the top seven holdings account for the vast majority of AI-related capital expenditure globally.

A Goldman Sachs report projects that Microsoft, Alphabet, Amazon, and Meta would spend nearly US$500 billion on AI infrastructure in 2026

Furthermore, because the index rebalances on an annual basis, NDQ ETF automatically adjusts to reflect the market’s view of which companies deserve the largest weightings.

The performance track record

NDQ’s unit price has more than doubled over the past five years, reflecting the extraordinary earnings growth delivered by its underlying holdings.

Today NDQ trades near all-time highs, up approximately 25% from its 52-week low of $48.11 reached in May 2025.

In addition, the fund pays distributions twice a year, in January and July, providing a modest but growing income stream on top of the capital growth.

All of this comes at a relatively low management fee of 0.48% per annum.

This represents one of the most cost-effective ways for Australian investors to access a globally diversified technology portfolio.

The AI angle is only getting stronger

The case for NDQ is increasingly inseparable from the case for artificial intelligence.

Microsoft’s Azure cloud platform, Amazon’s AWS, and Alphabet’s Google Cloud are the three dominant providers of AI infrastructure globally.

All three sit inside NDQ’s top ten holdings.

Nvidia, the semiconductor company whose GPUs power the vast majority of AI model training and inference workloads worldwide, has become the world’s most valuable company by market capitalisation and remains a core NDQ holding.

Meanwhile, Meta’s AI-powered advertising platform continues to grow revenues at a double-digit pace.

Apple, too, is embedding AI across its entire product ecosystem through Apple Intelligence.

The risks worth knowing

NDQ is not without risks and investors should understand them clearly before buying.

The fund carries meaningful currency risk, as its underlying holdings are priced in US dollars.

This means that a strengthening Australian dollar will reduce investor returns in AUD terms.

Concentration risk is also real, with the top ten holdings accounting for almost 50% of the index weight.

Moreover, the fund has no exposure to financial companies, which means it misses significant parts of the broader US economy.

Finally, at current valuations, the Nasdaq 100 trades at a premium to its long-run historical average, which limits the margin of safety for investors buying today.

Foolish takeaway

For Australian investors who believe artificial intelligence will reshape the global economy over the next decade but do not want the risk of picking individual winners, NDQ offers an ideal solution.

The ETF is diversified, low cost, liquid, and loaded with the companies best positioned to benefit from the AI megatrend.

The post Why the Betashares Nasdaq 100 ETF could be the best way to capture the AI boom appeared first on The Motley Fool Australia.

More reading

• Why invest in Betashares Nasdaq 100 ETF (NDQ) at an all-time high?
• 5 of the best ASX ETFs to buy and hold in 2026
• How I’d build a simple ASX portfolio with just 3 ETFs
• I love the BetaShares Nasdaq 100 ETF (NDQ). Here’s why I sold it.
• The best way to invest in AI on the ASX

Motley Fool contributor Mark Verhoeven has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, BetaShares Nasdaq 100 ETF, Broadcom, Goldman Sachs Group, Meta Platforms, Micron Technology, Microsoft, and Nvidia. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.