Gen Z investors - and this surprising age bracket - are doubling down on tech stocks

By Gordon Gottsegen

A recent survey showed that retail investors are doubling down on some Mag 7 stocks, but not all

Gen Z grew up during an era where computers and smartphones already saturated daily life. So it may not surprise that Gen Z investors tend to favor tech stocks.

But what may be surprising is that behind Gen Z, investors from the Silent Generation were also bullish about tech stocks during the third quarter of 2024. That's according to a survey conducted by online brokerage eToro.

The survey found that 68% of Gen Z investors and 55% of Silent Generation investors, which were classified as age 79 and older, increased their positions in tech stocks in the third quarter. On average, portfolio allocation for tech stocks grew 20% for both demographics compared with last quarter.

What makes this even more intriguing is that Millennial, Gen X and Baby Boomer investors decreased their tech holdings over the same quarter.

Bret Kenwell, an investment analyst for eToro, said that there were a few interesting findings that came out of this survey. "One that really stuck out to me was the fact that we saw tech allocation grow so much in the quarter for our youngest group, Gen Z, and the oldest group, Silent Generation. It's very interesting to see such a big move in such a diverse group," he told MarketWatch.

The Silent Generation is old enough to collect Social Security. And depending on their individual financial situations, they may be retired and drawing from their investment accounts to pay for their living expenses. This makes the survey's findings even more notable.

Keep in mind that this survey followed investor behavior in the third quarter of the year, or July through September. During this time, the tech-heavy Nasdaq Composite COMP hit a peak in mid-July, and then fell as investors rotated out of tech and into other sectors. Then in early August, the market saw a steep selloff, leading some retail investors to buy the dip. Buying tech stocks throughout this volatility represents a pretty bullish stance on tech.

"All the U.S. [indexes] made highs in July but then the S&P SPX did it again in August and September. Nasdaq hasn't made any new highs, so now there's this wonder of when will tech play catch up to the rest of the group?" Kenwell said.

The survey also asked retail investors about their views on the Magnificent Seven stocks, that is Nvidia Corp. (NVDA), Apple Inc. (AAPL), Microsoft Corp. (MSFT), Alphabet Inc. (GOOG), Tesla Inc. (TSLA), Meta Platforms Inc. (META) and Amazon.com Inc. (AMZN). It found that investors were buying some names while staying away from others.

The survey found 26% of respondents said they bought Amazon stock in the third quarter, or that they planned to invest more into the stock. This made Amazon the most popular of the Magnificent Seven stocks.

Meanwhile, other Magnificent Seven stocks were less popular. of Thirty-six percent of respondents said that they have not or do not plan to invest in Tesla, making it the least popular of the seven stocks. On top of that, 35% said they do not plan to invest in Alphabet, and 34% said they do not plan to invest in Nvidia.

This may have to do with the individual performance of each of the Magnificent Seven stocks. But as a whole, the Magnificent Seven may be looking less magnificent than it did earlier this year.

"Early on, the Mag Seven led from an earnings growth perspective. Basically all the S&P growth was coming from seven names," Kenwell said. "Now, finally, other sectors are doing well too. We're seeing some of that money rotate from tech into financials, utilities, industrials and communication stocks. It's been good to see a broadening in the rally because you can't just have seven names do all the work forever."

As the market moves on from the allure of the Magnificent Seven, retail investors may do so as well.

Keep reading: Turns out, the stock market can succeed without the Magnificent Seven

-Gordon Gottsegen

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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10-04-24 0441ET

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