'You need a steel stomach' The amateur investors defying fears of AI bubble

Phillip Inman 't was more than just a hunch, says Jacob Foot of his first foray into US tech stock investments back in 2020.

- Phillip Inman

The 23-year-old says he played around with artificial intelligence tools in his first job and thought to himself: this technology is going to be a big deal.

Foot put his savings each month into US shares and in particular the biggest investors in AI, the Magnificent Seven (M7): Nvidia, Amazon, Apple, Microsoft, Tesla, Alphabet (the owner of Google) and Meta (the owner of Facebook, Instagram and WhatsApp).

Five years on, Foot expects to purchase a "bigger house in London than I expected", a dream he could not have realised without his stock market bets paying off.

What marks out Foot and his generation of young investors is their bravery. When shares slide, they refuse to sell. Instead they wait for an upturn, or treat a dip as a buying opportunity.

The week before last, shares dropped on both sides of the Atlantic. In the US the S&P 500, which tracks the largest listed companies in the US, lost more than 200 points.

That came amid dire warnings of a major stock market correction, if not a full-blown financial crash. The Bank of England, the International Monetary Fund (IMF) and the boss of the US bank JP Morgan were among those raising fears that popular investments, including tech company shares, gold, crypto and bonds, were overvalued and could implode.

Yet despite the dire warnings, the stock market panic was short-lived and the loss of value was shallow, with the FTSE 100 and Wall Street again hitting record highs.

The rises followed a boom month in September, when shares often go sideways or fall. The S&P rose by more than in any previous September in the last 15 years.

The increases over the past 12 months are even starker, with shares in the M7 surging almost 37%, outstripping the 15% racked up by the rest of the S&P 500, according to FactSet data.