UK DIY investors flock to AI stocks as ChatGPT takes the world by storm

UK DIY investors are flocking to artificial intelligence (AI) stocks as companies such as ChatGPT developer OpenAI take the world by storm, eToro can reveal. 

The trading and investing platform’s user data shows the number of UK investors opening new positions in AI-related stocks jumped 54% quarter-on-quarter in Q1, which was ahead of the 50% growth seen across all eToro users globally.

While younger UK-based users are leading the charge, older users are also displaying a desire to become early investors in what is being tipped to be a trillion-dollar industry.

In the first three months of the year, the number of UK-based eToro users aged 18-34 opening new positions in AI stocks leapt 63% compared with the previous quarter. However, the number of investors aged 35-54 and over-55s opening positions in AI stocks also rose significantly, jumping 51% and 46%, respectively, in Q1.

In eToro’s latest Retail Investor Beat, a quarterly survey of 10,000 investors across 13 countries, one in three (32%) UK-based retail investors said they planned to increase their allocation to sectors that stand to benefit from AI and machine learning. Just 10% said they would reduce or avoid sectors that stood to benefit from AI and machine learning.

Ben Laidler, Global Markets Strategist at eToro, commented:

“The concept of artificial intelligence is not new for a lot of people. However, until now, the idea of having a life-like conversation with a computer, having it write your emails or compose music seemed like something in the distant future.

“However, in the past few months, firms such as OpenAI have offered a glimpse of the enormous potential of this still nascent technology – and that has clearly captured the hearts of investors.” 

eToro’s data shows that UK investors are backing a diverse mix of companies developing AI and other related technologies (see Figure 1).

Interest in C3 AI, a software company developing AI solutions for businesses, has rocketed since the start of the year, with the number of UK investors opening positions in the firm soaring over 9,000% quarter-on-quarter in Q1.

However, NVIDIA (open positions up 72%) and Intel (+48%), both of which make hardware used by AI firms, are also proving popular among investors, as is Alphabet (+39%), which has developed a rival to chatbot Chat-GPT called Bard.

There has also been a noticeable uptick in the number of open positions in OpenAI backer Microsoft (+24%), AI cybersecurity firm SentinelOne (+15%) and chip maker AMD (+10%), which like NVIDIA and Intel also makes hardware for developing and testing AI systems.

Laidler added:

“It is not an easy task picking the winners of tomorrow, especially with fast growing and emerging technologies such as AI. Therefore, it’s good to see that investors are backing a diverse range of AI-related firms and not all flocking to one company. Ideally, investors looking to gain exposure to AI would think about allocating money to a group of promising firms in this sector so that they are diversified, rather than hoping one or two come good.

“It’s also interesting to see that investors aren’t simply backing firms directly involved in the development of AI software and large language models; they are also backing the enabling firms such as NVIDIA, AMD and Intel, which provide the hardware powering the sector. Perhaps investors have the lessons of the mid-19^th century California gold rush in mind, where those who got richest were the shovel sellers rather than the prospectors.”

Figure 1: Growth in newly opened positions in Q1 2023 vs Q4 2022 amongst eToro’s UK users