Retail investors are increasing their purchases of AI-related stocks beyond large-cap names, In light of the recent news by Vanda Research. Net inflow from the group hit $1.48bn in Wednesday’s session, the highest in three months. The firm said average investors are beginning to chase the boom in tech stocks by widening their purchases across more AI-sensitive names including Palantir, Marvell and UIPath. Vanda flagged that profit-taking could put downward pressure on some of the market’s smaller and best-performing AI stocks such as C3.ai. Ahead of its fiscal Q4 report, C3.ai shares had jumped 258% year-to-date, but fell by more than 20% on underwhelming financial guidance to investors.
In light of the recent news by Vanda Research, retail investors are starting to feel the fear of missing out (FOMO) as AI and technology stocks continue to rally. On Wednesday, net inflow from this group hit $1.48 billion, the highest amount in three months, as investors expanded their AI-related stock purchases beyond large-cap names.
Vanda noted that average investors are beginning to chase the boom in tech stocks by widening their purchases across more AI-sensitive names such as Palantir, Marvell, and UIPath. At the center of the AI investment frenzy is chipmaker Nvidia, whose valuation this week pushed beyond $1 trillion. The stock has soared about 160% this year.
“AI and tech FOMO looks to be kicking in” following lackluster retail flows since the end of February, said Marco Iachini, Vanda’s senior vice president of research. However, Vanda also flagged that profit-taking could put downward pressure on some of the market’s smaller and best-performing AI stocks such as C3.ai. Shares of the software company plunged Thursday by more than 20% on underwhelming financial guidance to investors. Ahead of its fiscal fourth-quarter report, C3.ai shares had jumped 258% year-to-date.
Last week, Vanda said its in-house US equity positioning showed retail investors weren’t jumping full-force into the AI investing craze. They appeared to be cautious because of economic worries, including the stalemate in Washington over raising the debt ceiling. However, “over the past week, those conditions have shaped up quite nicely, resulting in Wednesday’s robust retail turnout,” Vanda said on Thursday.
It’s clear that AI and tech FOMO is starting to kick in among retail investors. As the stock market continues to rally, investors are expanding their AI-related stock purchases beyond large-cap names. Nvidia’s valuation has pushed beyond $1 trillion, and the stock has soared about 160% this year. However, Vanda also warned that profit-taking could put downward pressure on some of the market’s smaller and best-performing AI stocks.
To bring this to a close, it’s important for retail investors to do their due diligence before investing in AI and tech stocks. While the market is currently experiencing a boom in these sectors, there’s always the potential for volatility and unforeseen challenges. As with any investment, it’s important to weigh the risks and rewards before making a decision.
