While data shows individual investors dusting themselves off and moving back into the stock market this year, alas their love for Wall Street is uneven. That’s according to Vanda Research, which points out that while retail investor inflows into U.S. stocks are at levels last seen in 2020-21, the move has has been dominated by Tesla Inc.
TSLA,
+3.00%,
whose shares saw their worst-ever performance in 2022, and stocks exposed to a hot new technology.
“Tesla shares are experiencing an unprecedented surge in demand, and to a lesser extent, so are artificial intelligence-related stocks like NVDA and AI, as well as the rest of FAANG group,” said Marco Iachini, senior vice president, Giacomo Pierantoni, head of data and Lucas Mantle, data science analyst, in a Thursday note, using ticker symbols for Nvidia Corp.
NVDA,
+0.59%
and C3.ai Inc.
AI,
-14.13%.
Read: These 20 AI stocks are expected by analysts to rise up to 85% over the next year “If flows into cash equities sustain the current pace, we believe there is scope for the more speculative retail traders to pick up the slack in the options market too — where activity has been muted over the last year,” said the team in a note to clients.
Vanda Resarch
That said, the analysts see fear of missing out (FOMO) and momentum driving flows, making the situation different from early 2021 and leaving individual investors “susceptible to negative catalysts.” “That said, should macro conditions remain favorable in the near term, we do not exclude a continuation of speculative activity in AI-related stocks or other niches of the market,” said the Vanda Research team. Major stock indexes have bounced strongly to begin 2023, with the tech-heavy Nasdaq Composite
COMP,
-1.02%
up nearly 15%, while the S&P 500
SPX,
-0.88%
has bounced 8% and the Dow Jones Industrial Average
DJIA,
-0.73%
has gained 3.2%. JPMorgan reported last month that retail market orders as a percent of market value reached 23% on Jan. 23, which compares the 22% seen a few times back when GameStop shares
GME,
-6.78%
started soaring and Roaring Kitty and Reddit Wall Street Bets was the talk of the watercooler in early 2021. Marke …