ETFs to Buy as Microsoft Commits to Invest $18B in Australian AI Industry
In its largest-ever investment in Australia, Microsoft MSFT has announced a colossal $18 billion commitment to expand its AI and cloud infrastructure in the country by the end of 2029. This news, revealed by CEO Satya Nadella in Sydney, comes as the tech giant appears to be seeking to reverse recent stock weakness.
For investors, this aggressive expansion reinforces Microsoft’s dominant position in the “AI arms race,” thereby bolstering its long-term valuation.
However, rather than investing in the stock alone, investors may be more attracted to exchange-traded funds (ETFs) that include Microsoft among their top holdings, offering a diversified way to capitalize on the tech giant’s expansion while mitigating the risks associated with holding a single stock.
Before highlighting the specific ETFs that include Microsoft among their top holdings, let us take a closer look at why the company chose Australia for this significant investment, how it is expected to benefit the tech giant, and why we are advocating ETFs — so you can make a more informed decision.
Why Australia: Rationale Behind & Benefits of the $18B Investment
Microsoft chose Australia due to its “rigorous but tech-friendly” regulatory environment and aggressive push to become an AI hub.
As a testament to the accelerating pace of AI adoption in Australia, a joint survey by Google and Ipsos revealed in January 2025 that 49% of Australians reportedly used generative AI in 2024, up from 38% in 2023.
Against this backdrop, the nation stands out as a leadingglobal marketfor Microsoft 365 Copilot adoption. Microsoft is also supporting small and medium-sized enterprises in Australia in adopting cloud and AI tools, thereby driving their growth. For example, Arinco, a Microsoft-only partner operating across ANZ, has increased its headcount by more than 50% over the past three years, while its revenues have grown from $46 million to $60 million between 2024 and 2026.
With Australia ranking second only to the United States in global data center investments in 2024, according to a ranking published by Knight Frank, the nation has already secured similar billion-dollar commitments from other tech giants such as Amazon, underscoring its position as a prime destination for AI infrastructure. Microsoft has also followed suit.
The latest $18 billion investment is projected to expand Microsoft’s Azure cloud computing capacity in Australia by over 140%. This partnership with the Australian government also includes training 3 million Australians in AI by 2028 and strengthening cybersecurity in collaboration with agencies such as the Australian Signals Directorate.
This, in turn, is expected to boost MSFT’s revenue growth from Australia in the coming years, as the nation aims to build a ‘competitive, productive, and resilient’ AI economy under its National AI Plan, launched in December 2025.
The Case for ETFs Over MSFT Stock’s Ownership
While Microsoft’s AI drive is promising, buying an ETF that holds MSFT offers key advantages over owning the individual software giant.
In recent months, MSFT’s share price has witnessed volatility owing to “software fatigue” and high valuation multiples. As per a recent CNBC article, Microsoft has been trading about 20% lower in recent periods, while at the end of March 2026, the stock recorded its worst quarter on Wall Street since 2008, amid broader AI-driven market disruptions.
Keeping in account these developments, a lack of diversification means your entire investment thesis rests on one company’s execution. An ETF spreads that risk across dozens of other leading tech and AI firms, providing a smoother investment journey.
Hence, instead of betting solely on Microsoft, one may consider gaining exposure to the following ETFs where MSFT is a top holding:
Vanguard Information Technology Index Fund ETF Shares VGT
This fund, with net assets worth $105 billion, offers exposure to 317 companies in the following three general areas: technology, software and services, technology hardware and equipment, and semiconductor and semiconductor equipment manufacturers. MSFT holds the third position in this fund, with 10.20% weightage.
VGT has rallied 9.5% year to date. The fund charges 9 basis points (bps) as fees. It sports a Zacks ETF Rank #1 (Strong Buy) and traded at a good volume of 3.86 million shares in the last trading session.
State Street Technology Select Sector SPDR ETF XLK
This fund, with net assets worth $102.63 billion, offers exposure to 73 companies from technology hardware, storage and peripherals; software; communications equipment; semiconductors and semiconductor equipment; IT services; and electronic equipment, instruments and components industries. MSFT holds the third position in this fund, with 9.91% weightage.
XLK has gained 10% year to date. The fund charges 8 bps as fees. It sports a Zacks ETF Rank #1 and traded at a good volume of 13.83 million shares in the last trading session.
iShares Expanded Tech Sector ETF IGM
This fund, with net assets worth $9.44 billion, offers exposure to 288 hardware, software, internet marketing, interactive media, and related companies. MSFT holds the third position in this fund, with 8.07% weightage.
IGM has gained 9.6% year to date. The fund charges 39 bps as fees. It sports a Zacks ETF Rank #1 and traded at a volume of 0.87 million shares in the last trading session.
iShares U.S. Technology ETF IYW
This fund, with net assets worth $21.09 billion, offers exposure to 139 U.S. electronics, computer software, and hardware, and information technology companies. MSFT holds the fifth position in this fund, with 4.32% weightage.
IYW has soared 7.2% year to date. The fund charges 38 bps as fees. It sports a Zacks ETF Rank #1 and traded at a volume of 0.65 million shares in the last trading session.
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Microsoft Corporation (MSFT) : Free Stock Analysis Report
State Street Technology Select Sector SPDR ETF (XLK): ETF Research Reports
iShares U.S. Technology ETF (IYW): ETF Research Reports
Vanguard Information Technology Index Fund ETF Shares (VGT): ETF Research Reports
iShares Expanded Tech Sector ETF (IGM): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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