AI has become a "ghost story," with American retail investors turning into "ghost catchers": buying more as prices fall, sticking to a relentless fight!

Cailian Press, February 27 (Editor: Xiaoxiang) The more sharply the market falls, the more aggressive retail investors in U.S. stocks—who adhere to the “YOLO” (You Only Live Once) philosophy—seem to be charging forward faster…

According to data compiled by JPMorgan Chase, despite the S&P 1500 Software & Services Index dropping nearly 20% since the beginning of the year, retail trading activity in the sector is approaching record levels.

JPM strategist Arun Jain stated that, although “some areas of the market continue to show cracks,” retail investors still “support the software industry.”

Data shows that among the “Big Seven,” Microsoft, which suffered the worst decline, was actually the most favored target by retail investors last week, leading the year-to-date holdings change. Additionally, ServiceNow and AppLovin have also attracted significant retail attention.

These retail buying behaviors are occurring amid a hit to software stocks. Previously, many companies released new AI products, causing investor concerns that these products might replace services from companies like Salesforce and Adobe.

On Monday, the industry was shocked by Citrini Research’s release of a “horrifying AI horror story,” suggesting AI could trigger widespread economic turmoil, fueling market panic once again. Nassim Taleb, author of The Black Swan, also warned that the software industry could face a wave of bankruptcies.

However, fears about AI do not seem to have scared retail investors; during the sell-off, they kept entering the market as buyers, which has also restored some market confidence. Marshall Front, Chief Investment Officer of Front Barnett Associates, said, “In our view, the sell-off in software stocks is clearly excessive, and we believe current valuations are attractive.”

Notably, on Thursday, as Nvidia’s stock plunged sharply the day after its earnings report, triggering intense volatility in the tech sector, the software industry outperformed semiconductors significantly, achieving one of the largest relative gains in nearly a decade.

Meanwhile, retail investors also appeared to show strong buying interest in Nvidia’s sharp decline that day.

According to VandaTrack Research, despite Nvidia’s stock dropping 5.5% on Thursday—the worst single-day performance since April 2025—record levels of retail dip-buying occurred during the session. In the first 80 minutes of trading, retail net purchases of individual stocks, including Nvidia, reached $360 million, surpassing the total buy volume of $336 million for the entire previous trading day.

Additionally, bottom-fishing was prominent in Broadcom, the iShares Expanded Tech Software Sector ETF (IGV), and the iShares Semiconductor ETF (SOXX). Vanda Research even remarked that retail investors experienced their largest buying day in months.

In response, some analysts suggest that, in a market where every new AI development—no matter how minor—seems to cause hesitation, retail investors might actually be recognizing value.

Walter Todd, Chief Investment Officer of Greenwood Capital Associates, said, “Given the sell-off we’ve seen and its indiscriminate nature, I think this could be a good opportunity to find value.”

Todd noted that the long-term prospects for software companies may still be uncertain, but betting on short-term trends might be easier to manage. “These stocks have been sold off for weeks or even months, so it’s easy to foresee at least some short-term rebounds.”