Retail investors are gradually returning to the market, with buying activity now sitting at around the 77th percentile compared to the past year. This increase in confidence is likely due to easing geopolitical and energy concerns, which had previously weighed on investor sentiment.

Interestingly, while retail investors are returning to the market, their behavior is different than last year’s aggressive “buy-the-dip” mentality. Instead of jumping into the market with both feet, retail investors have largely remained on the sidelines during March and April, while still maintaining a strong preference for AI-related themes.

However, flows are now reaccelerating into these themes, with single-stock buying reaching the 81st percentile and ETF inflows rebounding sharply. This suggests that retail investors are becoming more confident in their investment decisions and are starting to take advantage of recent market volatility.

It’s worth noting that this increased confidence could be due in part to the improving economic outlook, as well as the increasing popularity of AI-related themes among retail investors. As more investors become aware of and interested in these themes, we may see even more activity in this area moving forward.