Study after study suggests that beating the market consistently with stock picking is very difficult. But in 2026, retail investors put that mindset to rest—and, so far, they’re winning. A recent study from JPMorgan shows that everyday investors have fared better than a few widely followed strategies, aided by a simple but powerful approach: focus on the biggest beneficiaries of the AI boom rather than spreading more money across broad index exposure.
That outperformance wasn’t driven by vague terms or one lucky trade. Instead, retail investors are leaning heavily on a few AI winners—especially semiconductors and AI infrastructure plays like Micron (MU) and Nvidia (NVDA)—where fundamentals have remained strong, and earnings expectations have continued to rise. At times, traders have also shown unusual optimism, holding positions due to volatility rather than rushing to take profits, suggesting they believe the AI rally still has some way to go.
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So, can retail investors continue to beat Wall Street benchmarks by sticking with AI leaders—or has the money already been made too easy? Let’s take a closer look.
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AI Stocks Help Retail Investors Beat Wall Street Benchmarks
Study after study has shown that stock picking is incredibly difficult, with most active fund managers historically failing to consistently outperform the S&P 500 ($SPX). According to data from S&P Dow Jones Indices, 79% of large US fund managers will underperform the S&P 500 by 2025. To that, retail investors responded, “What, as if it’s difficult?” And for good reason.
A JPMorgan team led by Head of US Equity Quant Strategy Arun Jain found that the majority of stocks bought by retail investors this year were semiconductors and AI-related names. What’s more, Jain found that everyday investors are actually much better at picking stocks. They compared those purchases to a dollar-cost averaging (DCA) strategy, where investors invest the same amount over time.
Jain said the stock selection of retail investors outperformed the returns generated by dollar-weighted strategies combined with the tech-heavy Nasdaq 100 Index, as well as several of the best-performing sectors for AI trading in 2026. The performance is mainly driven by concentrated positions in companies such as Micron Technology, MCDA and Micron Technology of Micron. which delivered strong year-to-date (YTD) returns, and the first two triple-digit shipping gains. “In one stock, the selloff has outperformed benchmarks over the past month or so, with strong bias toward MU, AMD, and NVDA,” the strategist wrote.
Meanwhile, performance within exchange-traded fund (ETF) shares has been more moderate. Retail investors outperformed the broader S&P 500 on a YTD basis. However, retail portfolios that rely on broad ETF holdings have followed the Nasdaq 100 DCA strategy, which highlights the difference between successful single stock selection and investment failure of various funds.
Can AI Investors’ Favorite Stocks Continue to Grow?
JPMorgan’s survey showed that despite the strong performance of stocks that favored retail investors, they did not rush to take profits, suggesting that they expect the rally to continue. With that, let’s take a closer look at whether the stocks that have helped investors outperform the broader market so far this year still have a place to work.
Memory shares are very valuable to retail investors. JPMorgan said Micron and Sandisk (SNDK) ranked among the best investors since February, with both stocks posting big gains this year. And the important point here is that the rally in memory stocks is far from over. Recent quarterly updates from companies such as Dell (DELL) and Hewlett Packard Enterprise (HPE) have highlighted the growing demand for AI servers. Notably, AI servers require high bandwidth memory (HBM) to handle the processing of large volumes of data. Demand for HBM currently far outstrips supply, and industry capacity is limited by complex production and bottling. This structural scarcity gives suppliers significant pricing power, resulting in premiums. With that, companies in this sector are expected to continue to deliver strong dividend growth, which should support further gains in their stock.
Moving on to another favorite of retail investors: chipmaker Advanced Micro Devices. The company has closed the gap with Intel in CPU chips and is now positioning itself to challenge Nvidia in the GPU market. The company is already generating billions in GPU sales and has secured two major deals with Meta and OpenAI that are expected to drive revenue growth in the future. In addition, AMD has a huge opportunity in the data center CPU market. In addition, AMD has a huge opportunity in the data center CPU market. I recently estimated that the company could generate $50 billion in annual server CPU revenue by 2030 under a conservative scenario—about three times what its data center segment generated by 2025. With that, AMD stock looks well-positioned for further gains.
Finally, there is Nvidia, the biggest player in the AI chip market. Nvidia has already taken the lead in training, with its GPUs remaining the absolute gold standard for training and running large-scale linguistic models (LLMs). In addition, the company is well-prepared for the next phase of the AI boom-inference, which involves using trained models continuously, effectively, and closely with the end user. Nvidia’s Vera Rubin platform extends its footprint across data center CPUs, GPUs, networks, and AI systems of scale. As long as the use of AI continues to rise, Nvidia should continue to earn more, which should also support its stock price.
S&P 500 Rally May Get a Boost from Consumer Investors
A team led by another JPMorgan strategist, Nikolaos Panigirtzoglou, expects retail investors’ share of US equities to rebound after falling to a four-year low at the end of the first quarter. Strategists argue that this could provide fresh air for US budgets.
“Although the share of retail investors in the US trade decreased significantly in the first quarter to 17%, we expect a repetition of the second quarter, similar to the second quarter of 2025,” according to the team led by Nikolaos Panigirtzoglou. “This will be in line with the selling interest we are seeing in the options space, where call options bought by small sellers fell between October 2025 and March 2026 but rose sharply in April/May 2026.”
The S&P 500 Index showed a similar performance pattern in 2025 and 2026, with muted returns in the first quarter, followed by a sharp rally in the second quarter. The team noted that the resurgence of the retail trade could provide new impetus to the broader market.
At the date of publication, Oleksandr Pylypenko held a position at: NVDA. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
