Rise of AI in Retail Investments: An eToro Study

Artificial intelligence (AI) tools such as ChatGPT by OpenAI are swiftly becoming the go-to assistants for retail investors around the globe, according to a recent survey by eToro, a leading trading and investment platform. Surprisingly, it is not only the tech-savvy young investors who are embracing AI. The generation with more investment years under their belt is also utilizing these advanced tools in their investment strategies.

The report titled “Retail Investor Beat” drew its findings from a broad study of 10,000 retail investors spread across 13 countries. In this data-driven report, 11% of retail investors divulged that they rely on AI tools like ChatGPT for picking and adjusting their portfolio investments. These tools harness the power of artificial intelligence to help investors make data-backed decisions, ranging from stock picks to bonds and market predictions.

Highlighting the growing acceptance of AI in the investment landscape, the study also found that a substantial 35% of global retail investors are open to exploring AI tools for their investment decisions. However, it is worth noting that 40% of investors remain skeptical and firm in their stance against AI's role in investment decisions.

The rise in popularity of AI-powered tools, especially ChatGPT, has been dramatic over the past eight months, signaling a surge in investments in the AI sector. Retail investors are showing an increased interest in utilizing AI, with 46% already using or open to using tools like ChatGPT. Among this group, a strong majority (61%) would allow AI to execute trades on their behalf in the future.

The study interestingly points out that the adoption of AI in the investment sphere isn't limited to the youngest or least experienced investors. In fact, it's the 35-44-year-olds with more investing years who lead the AI charge. The data reveals that 19% of this demographic already uses AI tools for investment decision-making, followed closely by 16% of investors with 3-10 years of experience.

In light of these findings, Ben Laidler, eToro's Global Markets Strategist, commented, “Consumer AI tools are experiencing unprecedented growth rates, with older, wealthier, and more experienced investors taking the lead in using them for investment purposes. They use AI for a plethora of investment tasks, from background research to stock picking, setting a trend that others are likely to follow.”

Despite AI's promise, it's important to remember that the technology isn't infallible. Laidler references an AI-powered ETF that significantly underperformed, highlighting the potential risks of over-reliance on AI.

When asked about their motivations to leverage AI, 43% of retail investors responded that they see AI as the future of investing. Other popular responses included the belief that AI could save time on research (42%) and make better decisions (34%). Moreover, 30% felt that AI could potentially outperform a traditional fund manager in picking investments.

The report also emphasized a bullish sentiment toward the technology sector among retail investors. When asked about their investment focus for the remainder of 2023, 30% of the investors indicated a preference for the technology sector, with 13% specifically mentioning AI.

In conclusion, Laidler noted, “AI and tech stocks have been a significant factor in steering global equities back into bull market territory this year. NVIDIA's success in converting AI potential into higher revenues demonstrates the role of AI in the recovery. The stock market's substantial gains will need to be supported by further successes across the tech sector.”

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