Individual investors keep chasing a 2023 stock-market rally, but are showing signs of pivoting toward electric-vehicle makers and away from artificial-intelligence plays, a Wall Street research firm said Thursday.
Investors are not only snapping up individual names but playing equity exchange-traded funds, signaling that they remain bullish on the broad market as well as specific themes, wrote analysts at Vanda Research, in a weekly note.
“We also start to see some signs of rotation from AI stocks to EV,” they said.
U.S. stocks fell Thursday, taking a breather after a torrid first-half rally led by megacap technology stocks that was accelerated by a surge in interest in artificial intelligence related companies. The Dow Jones Industrial Average
DJIA,
was down fell nearly 370 points, or 1.1%, while the S&P 500
SPX,
and Nasdaq Composite
COMP,
declined 0.8%.
Monthly net inflows into U.S. equities now average $1.4 billion a day, they said, close to the record from last March at $1.5 billion, according to Vanda. While there appears to be little room for a further acceleration of cash equity purchases, there’s still room for more speculative buying via the options market, they said (see chart below).
Vanda Research
Meanwhile, they noted signs of rotation, which are often sparked by investor excitement over short-term trends. In this case, Tesla Inc.’s
TSLA,
blowout second-quarter delivery numbers reported earlier this week “could be the catalyst to drive an increase in exposure to other EV names,” the analysts said.
Tesla “has already seen massive inflows and it is constantly the most-bought stock,” they wrote. “However, other less popular names such as [Rivian Automotive Inc.]
RIVN,
have just started to rebound, thanks also in part to a rotation from hot AI stocks — which could be seen as less interesting now that they have rallied for weeks,” they said (see chart below).
Vanda Research
On Wednesday, “retail net buying of RIVN rose to US$30 mn, as the stock surged 23% on Monday after the company’s quarterly deliveries were also higher than expected,” the analysts wrote.
Related: Rivian’s stock rises after upgrade with analyst saying entry to Europe is a welcome boost
“We expect to see more retail demand for EV stocks going forward,” they said, especially in laggards such as Nio Inc.
NIO,
Li Auto Inc.
LI,
Lucid Group Inc.
LCID,
XPeng Inc.
XPEV,
Plug Power Inc.
PLUG,
and Nikola Corp.
NKLA,
This story originally appeared on Marketwatch
