One year on from Chat-GPT mania, one in four retail investors now hold AI stocks

More than one in four (27%) retail investors globally now hold AI-related stocks in their investment portfolio, according to data from the latest Retail Investor Beat (RIB) from trading and investment platform eToro.  

In the study of 10,000 retail investors across 13 countries, investors were asked about their exposure to companies developing or investing heavily in AI. While a quarter currently hold such stocks (including 26% Romanian investors), a further 35% said that they plan to invest in AI firms in the future, while 30% are not interested. Almost 50% of the Romanian investors are planning to acquire AI stocks in the future, while only 18% declared that they are not interested.

Younger investors have the biggest appetite for this fast-growing sector with 43% currently having exposure to AI related stocks, compared with 34% for 35-44 year olds, 28% for 45-54 year olds and 11% for investors aged over 55. Looking across the globe, retail investors in the US (32%) and Czech Republic (33%) lead the way in terms of AI stock investing, while this drops to 20% for Australian retail investors, the lowest of any country surveyed. Romanian investors (26%) are on par with their peers in Italy, the Netherlands, and Norway.

Retail investors are also continuing to use AI technology as part of their investing approach, with 12% currently using ChatGPT-style tools to help pick investments. Currently 14% of Romanian investors declared that they are using an AI type of tool, but the percentage is lower than the 19% shown in Q3. Once again, globally,  it is the youngest investors who are embracing these tools the most, with one in five (20%) 18-34 year olds using AI tools versus 3% of over-55s. From young Romanian investors 21% are using AI, a sharp decrease from the 31% three months ago, but still leading the age category. While only 7% of the older investors aged over 55 are using this kind of tool, their percentage remained stable in the last half year.

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Commenting on the data, eToro Global Markets Strategist Ben Laidler, said: “AI stocks were the performance juggernauts of 2023, leading the tech sector revival and propelling the S&P 500 into bull market territory. This time last year, many of us were getting to grips with the huge potential offered by new generative AI technologies, following the launch of ChatGPT, and retail investors have voted with their feet on this for the last 12 months.

AI trends helped make NVIDIA and Meta the best S&P 500 stock performers of last year, with their share prices tripling. Whilst we’re unlikely to see a repeat performance from AI’s poster children in 2024 to the same extent, the benefits of its rapid adoption are broadening across the stock market and economy as it rapidly moves from hype to reality.”

Investors were also asked which sectors and assets classes they were most likely to prioritise in the coming months. Globally, crypto led the way, following the market’s recent rally, with 15% most likely to increase their investments in crypto, followed by cash assets such as savings accounts (13%) and domestic equities (12%).

The leading sector was technology, with 14% stating that they were most likely to increase their investments in this industry. This was followed by financial services (11%) and real estate, healthcare and energy (all 9%).

Crypto assets is the asset class where most Romanian investors (22%) are also looking to increase their holdings. It is the largest percentage of investors after the polish (26%) in the whole survey. Crypto is followed by cash assets and foreign equities (13%) and domestic equities (10%).  When it comes to increases in holding in sectors, Romanian investors favour technology (15%) followed by Energy, Real Estate (14%) and Financial Services (13%).

Bogdan Maioreanu, market analyst said: “Retail investors are running a balanced ‘barbell’ portfolio of large tech sector and crypto asset positions, alongside more conservative cash allocations.

The crypto winter has been thawing and there is renewed interest in this asset class from some investors, with catalysts such as the upcoming Bitcoin halving expected to have a positive impact in 2024. Meanwhile, the technology sector remains the retail investor favourite after its market-leading returns last year. A lot of other investors are also holding high levels of cash, with some ‘dry powder’ for riskier investments as interest rates fall and stock market uncertainties ease during 2024.”