Gen Z Trusts AI to Invest Even as AI Stock Hype Cools

Gen Z investors are drawing a sharp line between the technology they trust and the stocks they buy. More than three in four Gen Z and Millennial investors say they are open to letting artificial intelligence manage their portfolios, according to eToro's latest quarterly Retail Investor Beat — yet the share expecting AI stock prices to keep climbing has fallen sharply over the past year. The study, based on a survey of one thousand US retail investors carried out in August, captures a generation treating AI as a toolkit rather than a guaranteed winning trade.

The headline number is striking: 55% of all retail investors now either use AI to pick or alter their investments, or are open to doing so. That openness climbs to 77% among Gen Z and 79% among Millennials, while older generations trail far behind. The top reasons investors give for turning to AI are practical ones — saving time on research (42%), a belief that it represents the future of investing (40%), and expectations of better decisions (31%).

The data: steady openness, cooling enthusiasm

eToro has asked the same question for three years, and the generational trend is unmistakable. Younger investors started comfortable and stayed comfortable; older investors are slowly warming to the idea.

The optimism side of the ledger tells the opposite story. Just 47% of retail investors now expect AI stock prices to rise, down from 57% a year earlier, while the share expecting declines has grown from 12% to 17%.

The cool-down is steepest among Millennials, whose bullishness collapsed by twenty points in a year, with a growing minority now positioned for declines. Gen Z started out more measured and has drifted down more gently. Either way, the direction is consistent: retail investors are getting pickier about the AI trade even as they embrace AI the tool.

A tool, not a trade

That distinction sits at the heart of the findings. eToro US investment analyst Bret Kenwell describes the generational shift this way: for Gen Z, AI is becoming "more than a trade; it is part of the investing toolkit." Believing in the technology and assuming every company associated with it will deliver outsized returns are, in his view, two different bets — and young investors are increasingly treating them that way.

The nuance shows up in how investors judge Big Tech's enormous AI spending. Rather than scaring retail buyers off, the spending spree attracts them: 43% say the sums the biggest tech companies are pouring into AI make them more likely to invest in those companies, against just 14% who feel deterred — roughly three times as many attracted as put off, as trade-press coverage of the study notes. The pull is strongest with younger investors: 48% of Gen Z and 60% of Millennials say the scale of AI investment makes the giants more appealing. Meanwhile 44% still expect the group to outperform the broader market, unchanged from a year ago.

In other words, conviction is concentrating rather than evaporating. Investors trust the biggest builders of AI infrastructure to convert spending into results, but they no longer hand a free pass to the entire AI theme. That is a healthier, more disciplined stance than the blanket enthusiasm of the boom's early years.

Where the next dollar is going

The clearest sign of that discipline is where retail investors plan to deploy new money. Technology remains the most-named sector for increased exposure, but its lead has narrowed sharply — from 25% of investors a year ago to 17% now. Over the same stretch, healthcare rose from 6% to 10% and energy from 8% to 11%, while financial services dropped out of the top sectors for the first time in twelve quarters.

The rotation is sharpest among Gen Z. Healthcare and technology are now tied as the top sectors where Gen Z plans to increase exposure (18% each), with energy close behind at 16%. Kenwell frames the message simply: AI may dominate the headlines, but younger investors keep looking past it for the next opportunity. The AI story is not over for this generation — it is just no longer the only story.

Before you hand your portfolio to an algorithm

If the survey has you thinking about letting AI run your portfolio, it helps to read the enthusiasm with clear eyes. The market backdrop is demanding: The Motley Fool notes that the S&P 500's Shiller CAPE ratio is hovering near 40, roughly double its long-run average — a reminder that expectations are priced for a lot of good news across the market, AI names included.

There is also a difference between asking AI for research help and giving it the keys. Fully autonomous trading agents are moving from pilot programs to mainstream apps — Robinhood now lets AI trading agents buy and sell around the clock — but handing over execution means accepting risks like over-trading, confident-sounding but outdated advice, and losses that land squarely on you. The study's headline enthusiasm is mostly about AI as an assistant, not as an unsupervised money manager.

A sensible version of the AI-assisted approach looks like this: use AI tools to screen ideas, summarize earnings, and sanity-check your thinking, but keep the final call — and trade approval — with a human. Diversify beyond the AI theme, the way the survey's own respondents are doing by rotating into healthcare and energy. And treat the time saved on research as a starting point, not a substitute for understanding what you own. The generation that trusts AI to invest is also, notably, the generation learning to price AI stocks like anything else. For more coverage of how young investors are putting money to work, see the investing-genz hub.