After leading the stock market in 2024, the communications sector is once again the top performer in 2025. Despite the dominance of tech giants like Nvidia and Palantir, communications continues to excel, largely driven by Meta Platforms and Alphabet, which make up nearly half of the sector. 

The Vanguard Communication Services ETF offers investors an affordable way to gain exposure to these companies, though its holdings are heavily concentrated. 

Alphabet and Meta thrive on high-margin advertising models, unlike media and telecom firms that require heavy capital investments. Both companies are aggressively investing in AI and cloud infrastructure, yet their valuations remain attractive compared to other mega-cap tech stocks. 

Finsum: As long as these two firms continue their strong performance, the communications sector—and funds tracking it—could potentially keep outpacing the broader market.