“AI and tech FOMO looks to be kicking in” among retail investors, Vanda Research said Thursday.
Net inflow from that group hit $1.48 billion in Wednesday’s session, the highest in three months.
Investors were expanding their AI-related stock purchases beyond large-cap names.
Individual investors may be stepping off the sidelines of the equity market as rallies in AI and technology stocks give rise to fear of missing out, Vanda Research said Thursday.
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While the snapshot was for one day, retail investors appeared to have bought the dip in Wednesday’s trading session “with conviction,” the firm wrote. Net inflow of $1.48 billion was the highest amount in about three months.
Vanda 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 and beyond large-cap issues.
“AI and tech FOMO looks to be kicking in” following lackluster retail flows since the end of February, Marco Iachini, Vanda’s senior vice president of research, said in the note.
But it 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.
Big-name investors are going all-in on AI
Some of the best-known names in investing are betting big on artificial intelligence stocks.
Bill Ackman recently revealed a $1 billion bet on Google parent Alphabet, while Stanley Druckenmiller pumped a combined $430 million into Microsoft and Nvidia.
Tiger Global founder Chase Coleman, billionaire trader Paul Tudor Jones, and Ark Invest CIO Cathie Wood are all bullish on AI.
Some of the biggest names in investing are piling into artificial intelligence, the theme that has taken markets by storm in 2023.
Billionaire investors including Bill Ackman, Stanley Druckenmiller and David Tepper are betting big on firms at the forefront of the AI race – such as Microsoft, Alphabet and chipmaker Nvidia.
Here’s how seven top players are responding to the AI trend:
1. Bill Ackman
Ackman’s hedge fund revealed Monday that it had plowed over $1 billion into Alphabet in a quarter where the tech giant significantly ramped up its AI efforts.
Pershing Square Capital Management snapped up more than 10 million shares in Google’s parent company – buying about 2.2 million Class A shares and 8.1 million Class C shares, according to a Securities and Exchange Commission filing.
Hedge fund billionaire Coleman said last month that mega-cap stocks like Amazon now look like a good bet again after a brutal 2022, thanks to the rise of AI.
The Tiger Global founder told investors to buy the so-called FAANG stocks – shorthand for Facebook parent Meta, Apple, Amazon, Netflix, and Alphabet – and cited Amazon sellers’ use of ChatGPT to write product listings as an example of how AI was already boosting Big Tech.
3. Stanley Druckenmiller
Druckenmiller loaded up on Nvidia shares and made a new investment in Microsoft last quarter, snapping up two of the best-performing stocks of 2023.
The billionaire investor’s Duquesne Family Office bought a $220 million stake in Nvidia and upped its Microsoft position by $210 million, according to its latest 13F filing, released Monday.
Nvidia, the world’s No. 1 producer of graphics chips needed for high-intensity AI computing, has seen its share price double this year. Microsoft, which was an early investor in OpenAI and has integrated ChatGPT technology into its search engine Bing, is up 30%.
4. Paul Tudor Jones
Large language AI models like ChatGPT will have a massive impact on both the economy and the stock market, according to billionaire investor Jones.
He said Monday that the tool had completely shifted his outlook on both inflation and equities – and he’s now bracing for an AI-fueled “productivity boom” that drags down soaring prices and pushes up stock valuations.
“The introduction of large language models [and] artificial intelligence is going to create a productivity boom that we’ve only seen a few times in the last 75 years,” Jones told CNBC.
5. Morgan Stanley
It’s not just individual investors who are caught up in the AI fanfare.
In a research note last month, Morgan Stanley said that 2023 would be a breakthrough year for the technology, which it believes represents a $6 trillion investment opportunity.
“We see AI accelerating digital transformation and tech diffusion across the economy,” internet analyst Brian Nowak said in the note.
6. David Tepper
Like Ackman and Druckenmiller, the owner of the NFL’s Carolina Panthers made some big bets on AI over the past quarter.
Tepper’s family office Appaloosa Management bought 150,000 Nvidia shares worth around $42 million and 500,000 shares in Cathie Wood’s ARK Innovation ETF, which specializes in investing in disruptive tech.
Wood’s fund plunged last year but is up just under 24% in 2023 thanks to tech stocks’ massive rebound.
7. Cathie Wood
The Ark Invest CIO has never been one to miss out on a disruptive technological trend – and she’s been heralding AI’s potential long before ChatGPT’s explosion in popularity earlier this year.
Vanda last week 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.
“Over the past week, those conditions have shaped up quite nicely, resulting in Wednesday’s robust retail turnout,” Vanda said on Thursday.
