Investment Strategy Report: AI, Cloud Computing, VR Identified As Long-Term Theme in Market when Investing

Even as the initial hype around AI-specific stocks cools off, investors are still buying into the technology as a market-driver.

New data from the latest Retail Investor Beat survey from trading and investment platform eToro finds “that one in four (26%) American investors consider digital transformation – led by technology like AI, cloud computing and VR – to be a long-term theme in the market when investing.”

The study of 1,000 U.S. retail investors goes on “to show that more than one-third (36%) of investors between the ages of 18 and 54 consider digital transformation as a long-term market driver when building their portfolios.”

This data comes following a strong year in “the AI sector where share prices of traditional AI and big tech stocks continued to rise.” Even as those companies become more expensive and harder to buy into, many investors are “looking at the big picture.”

They’re turning their attention to AI-related stocks – “like semiconductors, hardware markers and software companies – which stand to gain value from a continued AI boom.” According to separate data from eToro on “the most-owned stocks among the platform’s users, these types of companies saw considerable increases in the number of holders from Q2 to Q3, including Broadcom Inc. (+21%), ASML Holdings NV (+15%) and Taiwan Semiconductor Manufacturing (+15%).”

eToro US Investment Analyst Callie Cox said:

“AI-specific stocks continue to climb in price and tech has been pummeled over the last few months because of rate concerns, so AI-focused investors have been forced to think outside the box. They’re turning to AI-related stocks for value in what’s become a bloated theme, and it’s a smart strategy. If AI changes the world, it should also lift the companies who supply and benefit from AI. This seems to be the second wave of the AI trade.”

While investors continue to find creative ways to ride the AI wave in the market, they’re also employing the technology “to assist their investing endeavors.” One in five (20%) of U.S. retail investors say they’re already “using AI technology to pick and/or alter investments in their current portfolios, a 5% increase from Q2 of 2023.”

No age group is buying into AI more than younger investors. In fact, nearly half (46%) of investors ages 18-34 say “they are already using AI technology to alter or pick their investments, up from 31% in the second quarter of this year.”

Investors ages 34-44 and 45-54 are also “increasing adoption, as the number of investors already using AI among these demographics increased from 38% to 45% and 12% to 19%, respectively.”

The outliers continue to be investors “over the age of 55, amongst whom just 2% are already using AI technology when investing.”

This doesn’t mean that this group “has completely shut down the idea, however, as 21% of U.S. retail investors ages 55 and older are open to the idea of using AI to help their investment decisions, up from 15% in Q2.”

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