Remember last week when software stocks got absolutely demolished? Yeah, well, the retail trading crowd just said “hold my energy drink” and dove right back in. JPMorgan just dropped some fascinating data on what exactly these dip-buyers have been up to, and honestly, it’s kind of impressive.
Here’s the tea: After software stocks crashed harder than a Windows 95 computer, retail traders initially did what any sane person would do—they backed away slowly. Buying activity hit rock bottom on February 5th. But then something beautiful happened.
From February 6th to 11th, these absolute legends came roaring back, throwing money at beaten-down stocks like they were at a Black Friday sale. And get this—they weren’t just randomly throwing darts at a stock board. They were actually being pretty strategic about it.
The Software Comeback Story
While Wall Street was still crying into their lattes about the “AI apocalypse,” retail traders were busy scooping up quality AI plays. Microsoft? Yep, they bought that dip. Palantir and AppLovin? Also on the shopping list. These aren’t exactly penny stocks we’re talking about—these are legitimate companies that just happened to get caught in the crossfire.
Meanwhile, they were selling off names like Salesforce, Roper Technologies, and Intuit. Basically, they were playing favorites with the AI darlings while ditching the more traditional software plays. Smart? We’ll find out.
The Magnificent Seven Opportunity
Here’s where it gets really interesting. When Amazon and Alphabet reported earnings and Wall Street freaked out about their AI spending (because apparently spending money to make money is now controversial), retail traders saw opportunity knocking.
They bought the post-earnings dips in both Amazon and Alphabet while completely ignoring Meta’s climb. It’s like they have a sixth sense for when institutional investors are being overly dramatic about quarterly numbers.
The David vs. Goliath Moment
JPMorgan also flagged something pretty wild: there are stocks where retail traders are buying heavily while hedge funds are shorting aggressively. Talk about a standoff. Companies like Hims and Hers and MicroStrategy are caught in this tug-of-war between the little guys betting up and the big money betting down.
This creates what JPMorgan politely calls “potential unexpected flows”—which is finance speak for “buckle up, this could get interesting.”
The Bigger Picture
What’s fascinating here isn’t just that retail traders bought the dip—it’s how they bought it. They’re not just throwing money at meme stocks anymore. They’re actually analyzing earnings, picking quality names, and making calculated bets on AI winners.
Sure, they might be wrong. The software sector could keep tanking, and those AI spending concerns could be totally valid. But right now, retail traders are showing they’ve learned a thing or two about timing the market.
Whether this ends up being genius or just lucky timing, one thing’s clear: the retail trading revolution isn’t slowing down. If anything, they’re getting more sophisticated. And that should probably make Wall Street a little nervous.