Retail investors beat Wall Street benchmarks with AI stocks And why that could change soon.

Study after study shows that it is very difficult to consistently beat the market through stock picking. Yet in 2026, retail investors are putting that assumption to the test — and so far, they’re succeeding. Recent research from JPMorgan indicates that everyday investors have outperformed many widely followed mainstream strategies, helped by a simple but powerful approach: Focus on the biggest beneficiaries of the AI ​​boom, rather than spreading capital across broad index exposure.

That outperformance wasn’t driven by obscure names or lucky one-time trades. Conversely, retail investors have leaned heavily on some of the major AI winners—particularly semiconductors and AI infrastructure plays like Micron ( MU ) and Nvidia ( NVDA )—where fundamentals are strong and earnings expectations continue to rise. In many cases, retail traders have also shown unusual optimism, holding positions through volatility rather than taking profits, believing the AI ​​rally still has room to run.

So, can retail investors beat Wall Street benchmarks by sticking with AI leaders — or have they already made money? Let’s take a closer look.

AI stocks help retail investors outperform Wall Street benchmarks

Study after study shows that picking stocks is so difficult that most active fund managers have historically failed to outperform the S&P 500 ($SPX). According to data from S&P Dow Jones Indices, 79% of US large cap equity fund managers Underperformed S&P 500 in 2025. To that, retail investors will say, “What, it’s hard?” And for good reason.

A JP Morgan team led by Arun Jain, Head of US Equity Quant Strategy He found that Most of the stocks bought by retail investors this year were semiconductor and AI-related names. Also, Jain found that everyday investors are actually better at picking stocks. They compared those purchases to a dollar-cost averaging (DCA) strategy, in which investors invest the same amount at regular intervals.

Retail investors’ individual stock picks, dollar-cost averaging strategies linked to the tech-heavy Nasdaq 100 index, and AI trading in 2026 outperformed returns generated by several sectors, Jain said. Micro Devices (AMD), and Nvidia, all delivered strong year-to-date (YTD) returns, with the top two posting triple-digit gains. “Among individual stocks, retail has surprisingly outperformed benchmarks over the past month, consistent with a concentrated tilt toward MU, AMD and NVDA,” the strategist wrote.

Meanwhile, performance among exchange-traded fund (ETF) stocks has been relatively more balanced. Retail investors have outperformed the broader S&P 500 on a YTD basis. However, retail portfolios that rely on broad ETFs follow the Nasdaq 100 DCA strategy, highlighting the difference between successful single-stock picks and lagging diversified fund investments.

Can retail investors’ favorite AI stocks continue to advance?

JP Morgan’s Research Despite the strong performance of retail investors’ preferred stocks, it showed that they are in no rush to take profits. With that, it’s worth looking closely to see if stocks that have helped investors outperform the broader market so far this year still have room to run.

Memory stocks are clearly top of mind for retail investors. Micron and SanDisk ( SNDK ) have been among retail investors’ top picks since February, with both stocks posting big gains this year. And the bottom line here is that the boom in memory stocks is far from over. Recent quarterly updates from companies such as Dell ( DELL ) and Hewlett Packard Enterprise ( HPE ) highlight the growing demand for AI servers. Notably, AI servers require high bandwidth memory (HBM) to handle the processing of large amounts of data. Demand for HBM currently exceeds supply, and industry capacity is limited by complex manufacturing and packaging bottlenecks. This structural scarcity gives suppliers immense pricing power, resulting in premium margins. Along with that, companies in this sector are expected to continue to deliver explosive profit growth, which should support further gains in their shares.

Moving on to another retail investor favorite: 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 making billions in GPU sales and has secured two major contracts with Meta and OpenAI that are expected to drive future revenue growth. Also, AMD has a huge opportunity in the data center CPU market. Also, AMD has a huge opportunity in the data center CPU market. I Recently rated Under a conservative scenario, the company could generate $50 billion in annual server CPU revenue by 2030 — more than triple its total data center segment by 2025. With this, AMD stock is well positioned for further gains.

Finally, the biggest player in the AI ​​chip market is Nvidia. Nvidia is already a leader in training, and its GPUs are the absolute gold standard for training and implementing large language models (LLMs). And the company is well-prepared for the next phase of the AI ​​boom—inference, which involves running trained models consistently, efficiently, and closer to the end user. Nvidia’s Vera Rubin platform extends its footprint across data center CPUs, GPUs, networking and rack-scale AI systems. As long as AI spending continues to increase, Nvidia should be a major beneficiary, which should also support its stock price.

The S&P 500 rally could get a boost from retail investors

The group is led by another JP Morgan strategist, Nikolas Panikirtzoglou expecting Retail investors’ share of U.S. stocks will rebound after falling to a four-year low at the end of the first quarter. Strategists argue that this could provide a fresh rebound for US equities.

“Although the share of retail investors in US equity trading fell to 17% in the first quarter, we expect a rebound in the second quarter, echoing in the second quarter of 2025,” the team led by Nikolaos Panigirtzoglou said. “This is consistent with the retail push we are seeing in the options space, where small option traders’ call preference declined between October 2025 and March 2026, but rose sharply in April/May 2026.”

The S&P 500 index has exhibited a similar performance pattern in 2025 and 2026, with muted returns in the first quarter, followed by a sharp rebound in the second quarter. The panel noted that a rebound in the retail sector would provide fresh momentum to the broader market.

At the date of publication, Oleksandr Pylybenko held the position: NVDA . All information and data in this article is for informational purposes only. For more information, see the Barchart Disclosure Policy here.