Individual investors in US stocks counterattack with "faith"! Heavy investment in AI concept stocks reaps profits in a bull market, outperforming professional investment strategies in terms of returns.

According to a recent report by Morgan Stanley strategist Arun Jain, this year retail investors' performance is outperforming some of the most popular investment strategies in the market, highlighting the increasing influence of retail investors in the US stock market. Arun Jain stated that the stock selection returns of retail investors in individual stocks have surpassed the returns of a dollar-cost averaging strategy correlated with the tech-heavy Nasdaq 100 index, as well as outperforming multiple sectors with the strongest performance in AI trading in 2026. These returns mainly come from concentrated holdings in semiconductor and AI-related stocks, including Micron Technology, Inc. (MU.US), AMD (AMD.US), and NVIDIA Corporation (NVDA.US). The strategist pointed out that due to retail investors holding these stocks heavily in the recent sector rally, they have "unsurprisingly outperformed the benchmark index in the past month or so". This result contrasts sharply with long-standing research. Historical studies usually indicate that stock selection is a difficult task in the long term, as most active investment portfolio managers consistently fail to outperform the S&P 500 index. However, in terms of holdings in exchange-traded funds (ETFs), the performance of retail investors is more balanced. Year-to-date, retail investor returns have exceeded the S&P 500 index, but when calculated in dollar-cost averaging terms, their performance still lags behind the Nasdaq 100 index. It is worth mentioning that another team led by Morgan Stanley strategist Nikolaos Panigirtzoglou predicts that retail trading, which fell to a four-year low at the end of the first quarter, is expected to rebound and potentially provide new momentum for the US stock market. The strategists stated, "Although the share of retail investors in US stock trading further declined to 17% in the first quarter, we expect a rebound in the second quarter, similar to the situation in the second quarter of 2025. This is consistent with the trend of changes in retail demand that we observe in the options market, with the number of small options traders buying call options declining from October 2025 to March 2026, but sharply increasing in April/May 2026." The strategist team expressed that retail investors are still an important driving force behind the rise in the US stock market, "Despite a slight decline in the second half of 2025/first quarter of 2026, they still account for nearly 20% of US stock trading volume, as well as nearly 50% of zero-day expiry options trading volume."