AI fears are not scaring them off, say JPMorgan and Citadel Securities strategists
Will it be retail investors to the rescue for software stocks in 2026?
Last year, retail investors outperformed professionals, by wading into the market when the pros were scarred by tariff worries.
Is Main Street about to beat Wall Street once again?
A JPMorgan team led by head of U.S. equity quant strategy, Arun Jain, finds that the bulk of investor purchases made by retail investors this year has been in AI stocks, semiconductors and Magnificent Seven companies.
JPMorgan finds that retail investors are actually pretty good at picking particular software and AI stocks. They compared their purchases versus a dollar-cost averaging strategy, in which investors would invest the same amount at regular intervals.
While February has seen a brutal Wall Street rotation away from tech, retail investors resumed selling the 470 other S&P 500 stocks to keep buying the dip in Magnificent 7 and AI players, said the strategists.
More evidence of such fearless buying comes from Citadel Securities’ Scott Rubner, who labeled retail participation as “unprecedented” to start the year.
“The magnitude, persistence, and breadth of buying activity have materially exceeded prior peaks, underscoring retail’s role as a primary source of incremental demand in early 2026,” he told clients on Wednesday.
February also isn’t showing any signs of a seasonal slump that tends to happen after big buying in January, Rubner said.
“Software is the clearest example – as the group has come under pressure, retail investors have leaned aggressively into the weakness, driving flows decisively into single-stock software names,” Rubner wrote.
The magnitude of those inflows is now at historical extremes, roughly two-thirds of the total net flow seen across all sectors in 2025.
Rubner commented that the sheer amount of money investors have been throwing at markets this year is more than they’ve ever seen before, and not down to a few wild days, but “persistent” activity:
Average daily options volume for the retail cohort is more than 15% higher, year-to-date, above last year’s pace, adds Rubner.
He said he’s watching for any signs of retail investors reducing the intensity of their buying.
Read: U.S. stocks are falling behind. It could be the beginning of an epic shift toward global markets.
The markets
U.S. stock futures (ES00) (YM00) (NQ00) are in the red as oil prices (CL00) (BRN00) jump with investors watching headlines around Iran. Brent is now above $71 a barrel for the first time since late July. Bitcoin (BTCUSD) is dropping.
The buzz
Weekly jobless claims fell 23,000 to 206,000, the lowest level of the year so far. The Philly Fed manufacturing survey showed expanding activity overall and the U.S. trade balance jumped 32% to $70.3 billion.
Walmart shares (WMT) are dropping after the retailing giant beat earnings expectations, but guidance disappointed. It’s also buying buying back up to $30 billion of stock.
Deere (DE) is gaining after the tractor maker’s better-than-forecast earnings and raised guidance.
Etsy shares (ETSY) are looking at a 20% rally after the online marketplace announced plans to sell secondhand clothing site Depop to eBay (EBAY) for around $1.2 billion. Ebay shares are also up after forecast-beating results and an upbeat outlook.
Figma stock (FIG) is shooting higher after record revenue from the design software group.
DoorDash (DASH) reported mixed results, but shares are jumping.
Carvana (CVNA) sales reached a record last year, but a murky forecast is hitting shares.
Occidental Petroleum stock (OXY) is climbing after an earnings beat.
Pending-home sales and leading economic indicators are due at 10 a.m. Fed Vice Chair for Supervision Michelle Bowman speaks at 8:30 a.m. and Minneapolis Fed Pres. Neel Kashkari at 9 a.m.
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The chart
The chart from Bank of America shows a big shift toward online shopping from bricks and mortars stores since early 2025. Economist Shruti Mishra offers three reasons for that, the first that spending growth has been growing faster for higher earners. Increased use of buy-it-now-pay-it-later plans also skews towards online channels and finally, increasing adoption of agentic AI is making shopping online more efficient, Mishra says.
Top tickers
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