This year, 2024, artificial intelligence has been a big deal in both company and retirement plans. The word “AI bubble” is being used a lot, but AI stocks like Nvidia Corp. NVDA -0.01% are up over 160% so far this year. It seems like regular investors aren’t as excited about AI stocks as they were earlier this year.
According to a new study from the online brokerage Public, 51.6% of the small investors they polled were positive about AI companies and stocks, while only 9.5% were negative. Still, only 30.8% said they were going to put more money into AI this year.
“From our point of view, the most surprising thing was probably how much hype there is around AI, whether it’s in the news, in everyday life, or on TV.” “But when we asked our members about it, I think they were still a little uncertain,” said Sam Nofzinger, general manager of crypto and trading at Public.
People who buy from Public were most often asked why they wanted to invest in AI with the answer “new technology excites me.” On the other hand, “I’m not interested” was the second most popular answer.
A potential reason for this disinterest, according to Nofzinger, could have to do with whether retail investors missed that first wave of AI hype earlier this year.
„AI got off to a great start this year. It looked great and really caught on. A lot of people, though, I think, were left out. “At that point, a lot of people hadn’t jumped in yet, and by the time they looked at these AI companies, they were already crazy,” Nofzinger said.
“I think our investors are asking themselves, ‘Did I miss the boat?'” Is it too late? “Maybe I want to watch this go a little longer before I join in myself.”
Public looked at how much the monthly trading volume of some stocks tied to AI had grown since October 2023, which was before the AI stock market really took off. It discovered that trades in Nvidia, Advanced Micro Devices Inc. (AMD 2.26%), Dell Technologies Inc. (DELL 2.35%), Intel Corp. (INTC 1.46%), and Super Micro Computer Inc. (SMCI 2.86%) started to rise at the end of 2023, peaked in June and July, and then started to drop again in the months that followed.
For instance, there were over 11 times as many trades for Nvidia in June 2024 as there were in October 2023. Only 3.5 times as many trades happened in September 2024 as they did in October 2023.
There were even bigger changes in other AI stocks. It was over 71 times more trading for AMD in July 2024 than it was in October 2023. In September 2024, it was only 3 times more trading than in July 2024. Dell’s trade volume was almost 600 times higher in June than it was in October of the previous year. Three months later, it dropped to 49 times higher.
Compared to a year ago, these trading amounts are still high, but investor interest in these AI stocks went up and down a lot.
Nofzinger, on the other hand, said that Nvidia, which was the most traded stock on the Public platform this year, was where most of the excitement among small investors in AI stocks was focused. Since June 18, when it ended at $136.23, Nvidia’s price has been pretty stable. However, some small investors have lost interest since then.
“I believe you’re finally noticing some changes at Nvidia. This is what we’ve seen for the past four to eight weeks.” Net money has left the country, Nofzinger said.
Should you still spend money on AI?
A lot of small investors in Public are optimistic about AI, so you might be wondering if it’s still a good idea to put money into it.
That’s what some big buyers think.
Fundrise, a website that lets regular people invest in things like private companies and real estate, thinks that AI could open up a market worth more than $20 trillion. This prediction is based on looking at past waves of technology, such as the rise of mobile and cloud technologies.
UBS also said in a recent note that it still likes AI stocks.
“For AI exposure, we still like the semiconductor space and megacaps. For quality AI stocks, investors should think about structured strategies or a buy-the-dip approach.” We see many AI opportunities in private markets, especially for investors who are ready and able to handle risks like low liquidity. These opportunities are mainly in large language models, software applications, and data centers. It was written in a note by Solita Marcelli, who is the chief investment officer Americas for UBS Global Wealth Management.
Allen Bond, a fund manager at Jensen Investment Management, doesn’t think AI is a bubble.
“There might be some frothy spots, if you will.” “But the truth is that the companies leading this early stage of AI investment—which is training the AI models—are big ones that make a lot of money and are very strong,” Bond told MarketWatch. “So, from our point of view, we believe that AI is helping some businesses now and will likely help them in the future.”
What do regular people need to do to get back on the AI train? Nofzinger said that a lot of small investors are still looking for some kind of trigger or use case to show how important AI is.
A poll by Public found that only 11% of small investors use AI tools to study investments. People who said they don’t use AI said they don’t trust the information it gives them, and 30% didn’t know they could use AI.
But on the other hand, 65% of those who answered said they think generative AI will likely become a normal tool for investors in the future.
It’s possible that small investors are waiting for AI to become more commonplace in their daily lives before they put money back into it. A lot of small buyers like to put their money into things they already know about.
