AI Impact Scares off Institutions? "YOLO" Retail Investors Enter High-profilely, Massively Increasing Holdings in Software Stocks, Especially Microsoft Corporation (MSFT.US)

At a time when Wall Street is worried about the impact of artificial intelligence (AI) and selling software stocks in droves, retail investors are choosing to go against the trend by increasing their positions, pushing retail trading activity close to historical highs. According to data from JPMorgan Chase, despite the fact that the S&P Composite 1500 Software & Services Index has fallen nearly 20% since the beginning of the year, retail trading activity in this sector is near record levels. JPMorgan strategist Arun Jain said that retail investors continue to buy software stocks even as "cracks continue to appear in certain areas of the market." Looking at individual stocks, Microsoft Corporation (MSFT.US) became the most favored target for retail investors last week and so far this year. Additionally, ServiceNow (NOW.US) and AppLovin (APP.US) have also attracted a significant amount of retail investor interest. Previously, the software sector saw intense selling, partly due to market concerns that the release of new AI products could replace traditional software services, impacting core businesses of companies like Salesforce, Inc. (CRM.US) and Adobe (ADBE.US). On Monday, Citrini Research released a report suggesting that AI could cause widespread economic disruption, further fueling so-called "panic trading." "Black Swan" author Nassim Taleb also warned that the software industry may be facing a wave of bankruptcies. However, some institutions believe that the current selling is excessive. Marshall Front, chief investment officer of Front Barnett Associates, said, "We believe the selling in software stocks has been overdone, and valuations are now attractive." It is worth noting that AI concerns do not seem to deter the "YOLO" (You Only Live Once) style retail investors. VandaTrack Research data shows that when NVIDIA Corporation (NVDA.US) saw its biggest decline in three months on Thursday, retail investors bought on the dip at a historical high rate. At the same time, signs of significant retail buying were seen in Broadcom Inc. (AVGO.US), iShares Expanded Tech-Software Sector ETF, and iShares Semiconductor ETF. According to Vanda data, within the first 80 minutes of trading on Thursday alone, retail investors bought a net total of $336 million in stocks, making it one of the biggest single-day buying efforts in months. Analysts point out that in an environment where the market is highly sensitive to every AI development and even paranoid, some investors may be looking for value opportunities amid indiscriminate selling. Walter Todd, chief investment officer at Greenwood Capital Associates, said, "Given the recent selling levels and their relatively indiscriminate nature, now may be a good time to find value." He added that while the long-term outlook for the software industry remains uncertain, the possibility of a short-term rebound is not low. "These stocks have been aggressively sold for weeks, even months, making it easy for a technical rebound to occur."