Holding Layers of the AI Value Chain

In rand terms, the Nasdaq 100 Index has ended 14 of the last 16 calendar years in positive territory, compounding at roughly 24.7% per annum since the start of 2010 to the end of 2025. In that time, investors have also experienced a 28.1% and 5.6% loss, but this also came with more heart-stopping weeks than most people can stomach. Both things are true. Which one you experience as an investor depends almost entirely on how often you look at the returns.

Volatility Observed too Frequently, and Acted Upon, is the Risk

Opening the SatrixNOW app on a Tuesday morning to view the Satrix Nasdaq 100 ETF will tell you a story. Down 2.1%, and then up 1.4% the next day. A brutal fortnight in March and a screaming June. If that is the only lens investors use, they will conclude that this is a speculative, unstable, frankly reckless asset to own, and they will act accordingly. Buying after it has run and selling after it has fallen, which is the precise inverse of what the instrument rewards.

Considering daily or even monthly observations of a growth index like the Nasdaq may seem like pure noise because, at that frequency, prices are driven by positioning, liquidity, rate expectations, and headlines. None of which have anything to do with whether anything fundamentally changed in the fund’s holdings. Expand the observation window and the signal-to-noise ratio inverts. The fundamentals begin to dominate, because over years, earnings predominantly move a share price.

Why Large-Cap Growth Stocks Matter in Long-Term Investing  

The case for growth stocks rests on a simple observation: over expanded time horizons, the best companies – those that innovate, dominate their markets and scale globally – can generate superior long-term returns. The Nasdaq 100 is arguably the purest expression of this principle. It excludes financial companies (which operate in mature markets with regulatory constraints) and focuses on the 100 largest non-financial firms on the Nasdaq exchange. Approximately 73% of the fund comprises Information Technology and Communications Services. This concentration is by design, reflecting the Nasdaq's methodology and the fact that these are where global capital is concentrated at the moment.

The challenge for investors is that, at times, they struggle with this positioning because the fund can be volatile when looking at it over short-term periods. In 2022, it fell 28.1%. In 2020, amid pandemic chaos, it surged 56.0%. These swings terrify investors and tempt them to exit at the worst moments. The solution is not to avoid growth stocks, but to set expectations and time horizons before deploying capital. The table below illustrates the monthly noise and the full-year returns of the Nasdaq 100 Index, in rands. The red and green monthly noise is cancelled out when looking at full-year returns.

What is Inside this Massive Growth Engine

Reinvesting at a scale no other cohort can match: The four largest hyperscalers – Amazon, Microsoft, Alphabet, and Meta – have collectively indicated that they expect to spend roughly 725 billion US dollars on capital expenditure in 2026. This would be a 77% increase on the 2025 record of 410 billion US dollars. These are country-level infrastructure sums, spent by four private companies, aimed at the same three inputs: chips, power, and floor space. That spending is precisely what makes the shares volatile in the short run and drives volatility in the overall index. This spending depresses free cash flow today for a return that arrives later, and the market reprices its patience every quarter.

Structurally profitable while they spend: This is the distinction between the current buildout and the dot-com era that gets lost in the comparison. These are not cash-burning start-ups funding capital expenditure (CapEx) with equity issuance. The Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla), have posted earnings growth above 20% in ten of the past eleven quarters up to Q1 2026, and consensus has repeatedly been revised upward through 2026 rather than downwards.

The top holdings of the fund are:

They own the bottlenecks: The most valuable position in any supply chain is the one nobody can route around. Right now, that is memory chips. High Bandwidth Memory (HBM) is effectively sold out for 2026 under multi-year agreements, conventional Dynamic Random Access Memory (DRAM) contract prices rose sharply through the first half of the year. Micron sits inside the Nasdaq 100 as one of only three companies on earth with a meaningful share of that market. As an investor, you do not have to pick it as you already own it through the Satrix Nasdaq 100 ETF.

Where the Fund Sits in the AI Value Chain  

The strongest argument for owning the fund is that it owns multiple layers of the AI value chain. Below are the AI and computing stack, layer by layer, and what investors hold at each level.

Looking at the above, as an investor, you are not betting on which company wins the so-called AI race. Instead, investors are collecting a toll on the road that all of them must drive down. Since the 2023, the value chain has rewarded layer 2 substantially, and NVIDIA went from under 20 US dollars a share to now around 215 US dollars, an almost 1400% return. Since 2025, memory-related companies in layer 3 have seen a significant increase in investor interest as HBM became a key bottleneck in AI infrastructure. Layer 1 has also gained interest as power infrastructure solves grid capacity constraints.

Since 2025, Micron went from 64 US dollars a share and peaked above 1200 US dollars, around 1600% in share returns. An investor who had picked a single winner in those periods would have needed to correctly anticipate those migrations. An investor who owned the Satrix Nasdaq 100 ETF simply held the chain and let the value move around inside it.

The July 2026 addition of SpaceX makes the point again. Whether it works out as an investment remains a mystery, however, at around 1% of the fund’s weight, it is not decisive for the overall index performance. But the mechanism is the point; the index that this ETF tracks keeps admitting the frontier without investors having to do anything at all.

The Bottom Line: Zoom Out  

The Satrix Nasdaq 100 ETF gives a South African investor, in rands and in a single trade, an ownership stake in the companies building the computing infrastructure that the next decades of global productivity will run on. All at a TER of 0.42%. Not one of them, but almost all of them, across every layer of the chain.

That exposure is genuinely volatile over short periods, and it should be. The businesses inside it are spending billions of dollars a year on assets whose payback the market cannot yet verify, and the market re-prices its confidence in that bet continuously. If investors observe the fund daily, they will experience that re-pricing as chaos and noise, and may end up acting on it. If they zoom out and observe it in three and five-year blocks, even on a one-year basis, the story is totally different. Ultimately, investors are well rewarded when they do not adjust long-term investment goals in the face of short-term volatility.

Disclaimer

_{Satrix consists of the following authorised Financial Services Providers: Satrix Managers (RF) (Pty) Ltd and Satrix Investments (Pty) Ltd. The information does not constitute financial advice. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.} 

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