The epic run may surprise, as red-hot stocks are like Nvid,, Broadcastand Palantir Technologies all in the technology sector. But communication has some benefits that could help the sector continue to outperform large indexes such as the S&P 500.
The Vanguard's communications services Exchange Trading Fund (ETF) (Nysemkt: Vox) A simple way, low cost to invest in the sector. With only 0.09% costs ratio, or 90 cents for every $ 1,000 invested, the fund is a cheap way to reflect the performance of the communications sector.
This is what drives the sector to new heights, and why Vanguard's communications services ETF could be worth buying now.
Image source: Getty images.
Almost half of the communications sector Meta platforms(NASDAQ: META) and Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL). Although it is common for a handful of companies to be greatly weighted, no other sector is just as central in two companies as communications alone.
Vanguard Sector ETF
The two best holdings
Allocation in the top two holdings
Vanguard ETF Communication
Meta and alphabet platforms
48.5%
Optional Vanguard ETF user preference
Hamazon and Testify
40.8%
Vanguard Energy ETF
Exxonmobil and Kevr
34.4%
Vanguard Information Technology ETF
Apple and nvidia
30.7%
Vanguard ETF user staples
Wholesale costco and Step
27.2%
Vanguard ETF Materials
Linde and Sherwin-Williams
21.9%
Healthcare Vanguard ETF
Lilly's creams and Unitedhealth group
18.6%
Vanguard ETF utility
Nextera's energy and The energy of constellation
18.4%
Vanguard Financials ETF
JPMorgan Chase and Berkshire Hathaway
16.5%
ETF Real estate vanguard
Prologis and American tower
11.6%
Vanguard Industrials ETF
GE Aerospace and Caterpillar
7.2%
Data Source: Vanguard Group.
Although ETF has Vanguard Communications Services 117 holdings, that has not diversified when looking at the weight of the highest holdings. More than that, 11.8% of the reservoir is in media giants Netflix,, Walt Disneyand Comma. 10.4% of the fund is in telecommunications companies At & t,, Verizon communicationsand T-mobile.
Add it all up, and the reservoir is essentially a big bet on a small number of companies.
The pure size of meta and alphabet platforms shows how valuable social media has become comparable to traditional communications companies. Aside stock valuations, Meta and the alphabet have two of the best business models on the planet.
Google Services, which includes YouTube ads, Google Search, Google Network, Google subscriptions, won platforms, and devices, $ 304.93 billion in 2024 revenue and $ 121.27 billion in operating income for an active edge of 39.8%.
This is not even a factor in Google Cloud, a fastest growing segment of the alphabet according to revenue. However, the segment is currently low edge because the alphabet pours investment dollars into the ability to build ability to keep up with Amazon web services Microsoft Azure.
By comparison, the Meta Platforms family of apps (Instagram, Facebook, WhatsApp, etc.) won $ 164.5 billion in 2024 revenue and $ 87.1 billion in operating income – for an operating edge of 53%.
Alphabet and meta edges have so high due to the light nature of the capital of their advertising business models. Netflix, Disney, and Comcast spend billions every year producing content. Telecommunications companies must invest in and maintain Physical Infrastructure and Customer Service programs.
Alphabet and Meta do not have high operating costs, which allow them to convert more sales into profit. The main costs are labor and maintenance of their platforms. Basically, creators content on YouTube and Instagram do the job for them. It is a completely different business model than trying to produce content in the hope that audiences receive well.
High margins allow both companies to support massive R&D programs, stock repurchase, and (as last year) pay off. In 2025, Meta invests $ 65 billion in capital expenditure (CAPEX) – primarily on artificial intelligence (AI) – to promote engagement across its platforms and allow advertisers to run more precise campaigns. Its reality lab division (highly unprofitable) invests in virtual and extended software and hardware. But, again, Meta can afford these investments because the advertising business is so strong.
Alphabet has incorporated the functionality of AI into Google's search and is rating cloud infrastructure. He predicts a stunning $ 75 billion in 2025 Capex. Despite a myriad of advantages, the alphabet sports a price-to-win ratio (P/E) onwards of just 20.4, compared to 28.4 for meta platforms. However, Meta advertising business is growing faster and is arguably better than the alphabet, so the premium valuation makes sense.
Yet, both stocks have P/ES lower than many other mega-cap technology names. And that's a huge gains factoring of 245% meta over the last three years.
Investing in the communications sector is a big bet on the alphabet platforms and Meta, which is why the majority of this discussion focused on both of those stocks. Despite a performance in the sector in 2024, and so far in 2025, both stocks have reasonable valuations and strong growth prospects, suggesting that they may be worth buying now.
As long as both stocks continue to set strong returns, Vanguard Communications Services ETF can continue to outperform the S&P 500. The ETF is a good bet if you are interested in the alphabet and meta and want some of diversification beyond those two stocks. The ETF has a 1% product and a 23 p/e ratio. That's much less expensive than other growth -focused ETFs, such as Vanguard Information Technology ETF, which has 38.5 P/E and only a product of 0.6%.
However, if you are looking for a variety of mega-cap growth stocks without the restrictions that come with investment in stocks in a particular sector, it might be worth looking closer on the Vanguard Growth ETF or the Vanguard Mega Cap Growth ETF.
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John Mackey, former CEO of Whole Foods Market, a Sub -company from Amazon, is a member of the Board of Directors of the Motley Fool. Randi Zuckerberg, former Market Development Director and spokesman for Facebook CEO and Meta Platforms, Mark Zuckerberg, is a member of the Board of Directors of the Motley Fool. Suzanne Frey, an alphabet executive, is a member of the Board of Directors of the Motley Fool. JPMorgan Chase is an advertising partner of Motley Fool Money. Daniel Foelber He has posts in Caterpillar and Walt Disney and has the following options: Short March 2025 $ 115 calls on Walt Disney. The Motley Fool has jobs in and recommends the alphabet, Amazon, American Tower, Apple, Berkshire Hathaway, Chevron, Costco Wholesale, JPMorgan Chase, Linde, Meta Platforms, Microsoft, Netflix, Nextera Energy, Nvidia, Oracle, Oracle, Oracle, Oracle, oracle , Paving Technologies, Technical Technologies. , Tesla, Vanguard Index Growth Vanguard ETF, Vanguard Real Estate ETF, Walmart, and Walt Disney. The Motley Fool recommends Broadcom, Comcast, Constellation Energy, GE Aerospace, Sherwin-Williams, T-Mobile Us, Unitedhealth Group, and Verizon Communications and recommends the following options: Long January 2026 Calls $ 180 on American Tower, Long January 2026 $ 395 Calls $ 395 Microsoft, Long January 2026 $ 90 Calls on Prologis, Short January 2026 $ 185 Calls Forward American Tower, and short calls January 2026 $ 405 on Microsoft. The fool has motley and Disclosure Policy.
