UK retail investors buying ‘shovels’ amid AI gold rush 

Q1 Top stocks: UK retail investors buying ‘shovels’ amid AI gold rush

• UK investors are increasingly turning to the ‘picks and shovels’ of the AI gold rush, such as ARM Holdings and Micron Technology
• Tech names successfully integrating AI, such as Palo Alto Networks and MicroStrategy Incorporated, also see huge uptick in Q1
• Mattel saw biggest QoQ drop in users (-22%), alongside a number of US stocks

British retail investors are increasingly turning to the ‘picks and shovels’ unlocking the growth of AI, according to the latest quarterly stocks data from trading and investing platform eToro.  

eToro looked at which companies saw the biggest proportionate change in holders, quarter-on-quarter (table 1), while also looking at the 10 most held stocks on the platform by UK users (table 2). 

The data reveals that eToro’s UK users are taking an interest in the ‘picks and shovels’ of the AI gold rush, backing several semiconductor firms which produce chips that are able to store and process massive datasets that enable AI. Cambridge-based ARM Holdings saw a 54% increase in UK users holding the stock, while Broadcom Inc (53%), Taiwan Semiconductor Manufacturing (37%), Micron Technology (27%) and Advanced Micro Devices (26%) also feature in the top 20 quarterly risers. AI juggernaut Nvidia also sustained its popularity with a 41% quarter-on-quarter increase in UK-based holders.

While the rise in ‘picks and shovels’ exposure is striking, investors are also focusing on companies successfully integrating AI (and helping other companies to integrate AI) into their operations, such as  cybersecurity firm Palo Alto Networks (126%) which topped the leaderboard. Ranking second was software firm MicroStrategy Incorporated (90%), whose bitcoin-proxy credentials helped it ride bitcoin’s 2024 rally.

 
Commenting on the data, eToro Global Market Strategist Ben Laidler said: “’During a gold rush, sell shovels’, as the saying goes. Investors are clearly seeing value in semiconductors, a key enabler of AI, and ​​looking for growth stocks in this area with slightly more modest valuations than the de facto leader Nvidia. 

“But it’s not just the ‘shovels’ – companies that are effectively integrating AI are attracting swathes of new investors, who are being rewarded by the technology’s move from hype to revenues and profits.” 

At the other end of the spectrum, eToro’s UK users cooled on previously popular American value stocks. The most significant QoQ fall was Mattel (-22%), suggesting that its Barbie movie shine is beginning to wear off. Mattel was followed by several other large American value stocks, including Wells Fargo (-17%), Atlanta Braves Holdings (-17%), Target Corp (-15%), Fedex Corporation (-14%) and Bank of America Corp (-13%). 

Laidler adds: “The stardust around Barbie-maker Mattel has started to fade. The firm enjoyed a sizeable share price boost with the huge commercial success of the film last year, but this momentum hasn’t continued and investors are responding. 

“We’ve seen a wider cooling towards American value stocks, with firms like Wells Fargo, FedEx and Bank of America falling despite resilient share price performance. Investors are still very much in ‘risk on’ mode, looking to back what they see as the winners of tomorrow – no doubt spurred by the spectacular performance of many AI and tech stocks over the past 12 months.” 

Table 1: Shows which stocks have seen the biggest proportional increase and decrease in holders on the eToro platform quarter on quarter

*Past performance is not an indicator of future results

Table 2: Shows stocks most widely held by eToro users in the UK and their position last quarter

Notes

The tables compare data from the eToro platform on the final day of Q1 2024 with the final day of Q4 2023. The data refers to funded accounts of eToro UK-based users. 

The data in the first table shows the 10 stocks which have seen the biggest proportional increase and decrease in UK-based holders on the eToro platform quarter on quarter (Q1 vs Q4). The data in the second table shows the top 10 most held stocks positions (open positions) by UK-based investors on the eToro platform at the end of the Q4 2023. As the vast majority of stocks traded on eToro are the real asset, this data does not include positions held as CFDs. 

All data accurate as of after market close on Friday 29th March.