Gen Z Investment Shift: Healthcare Ties Tech, AI Hype Cools

Something is changing in the way Gen Z handles money. According to eToro's latest quarterly Retail Investor Beat survey, the Gen Z investment shift is picking up speed: young investors still trust artificial intelligence to help run their portfolios, yet they are cooling on AI stocks themselves and spreading their next dollars across healthcare and energy instead of betting everything on tech. The study, carried out by research firm Opinium in August among more than eleven thousand retail investors across thirteen countries, suggests America's youngest investors are learning to separate their faith in AI as a tool from their expectations for AI-themed shares.

AI is a tool, not a trade

Fifty-five percent of all retail investors already use AI or are open to using it to pick or alter their investments, eToro reported. Gen Z leads that charge: seventy-seven percent of the generation's investors say they are open to letting AI manage their portfolios, just below millennials at seventy-nine percent, and well above Gen X at sixty-eight percent and boomers at thirty-two percent.

But the trade itself has lost its shine. The share of investors expecting AI-related stocks to rise fell from fifty-seven percent a year ago to forty-seven percent now, eToro reported, while the share expecting declines rose by five points. Gen Z reads as measured rather than bearish: forty-one percent expect AI-linked shares to climb this year, slipping from last year's level. The numbers behind the Gen Z investment shift point to diversification: belief in the technology, skepticism about the valuations.

"Gen Z's relationship with AI is becoming increasingly nuanced," said Bret Kenwell, US investment analyst at eToro. "While younger investors are comfortable incorporating AI into their investment decisions, that does not automatically translate into unrestrained bullishness on AI-related stocks."

Confidence in the biggest tech names is holding up even as AI-stock fever cools. Forty-four percent of investors expect the so-called Magnificent Seven to outperform the broader market, unchanged from a year earlier, according to the survey. The giants' heavy AI spending actually helps: forty-three percent of investors say those sums make them more likely to buy the stocks, against fourteen percent who say the spending puts them off. Younger investors are the most enthusiastic, with forty-eight percent of Gen Z and sixty percent of millennials saying the spending makes them more likely to invest, compared with fifty percent of Gen X and twenty-eight percent of boomers. This split is the engine of the Gen Z investment shift: the technology stays central to how they invest, even as the stocks tied to it lose their special status.

Healthcare and energy crash the party

The clearest sign of the Gen Z investment shift is where the next dollar goes. Technology remains the top sector investors plan to increase exposure to, at seventeen percent, but its lead has narrowed from twenty-five percent a year ago. Healthcare rose from six percent to ten percent, while energy reached double digits. For the first time in three years, financial services, at eight percent, fell outside the top sectors investors favor. Among Gen Z, healthcare and technology now tie for the top spot at eighteen percent each, with energy close behind at sixteen percent.

"AI is not losing relevance for this generation, but it may be losing its exclusivity," Kenwell concluded in the release. "Technology and AI may dominate the headlines, but younger investors continue to look beyond them for other opportunities."

What Friday's rally tells you

The Gen Z investment shift is landing in a market that just handed investors a lift. Data reported by the Associated Press showed U.S. stocks rallying on Friday after a softer-than-expected September jobs report cooled expectations for another Federal Reserve rate hike, with the Nasdaq Composite climbing close to a percentage point to finish near twenty-seven thousand one hundred ninety-one and the S&P five hundred adding about three-quarters of a percent to settle near seven thousand seven hundred twenty-three.

That cautious streak lines up with other recent data. Many young investors are treating ETFs as the early building blocks of their portfolios, a trend explored in the Gen Z ETF investing playbook, even as surveys show a growing share diverting some cash toward sports betting as an investing playbook of its own.

The takeaway is that range matters more than picking a single hot sector. Gen Z investors are treating AI as part of the toolkit, questioning the price tags on AI stocks, and looking to healthcare and energy for what comes next. That is the Gen Z investment shift in one snapshot: AI does the research while the dollars flow where the growth looks fairly priced. For the full survey details, see eToro's Retail Investor Beat release.