Retail investors shift allocations to tech amid Q3 earnings outlook

Written by: Rita

Retail inflows amounted to $5.7 billion for the week, below the 12-month average of $6.7 billion. The percentile of inflows into technology sector ETFs rose from 4% four weeks ago to 73%. J.P. Morgan’s report dated October 7, 2026, noted that retail funds rebounded from September lows, with technology regaining focus.

JPMorgan believes that retail investors are net buying across the entire technology sector, with software also receiving strong interest. Whether this rotation can continue will be tested by the Q3 earnings season. The consensus expectation for earnings growth during this earnings season is 31%, with all sectors outperforming year-over-year.

Retail investor flows this week totaled $5.7 billion, below the 12-month average of $6.7 billion. ETF inflows reached $4.7 billion, while individual stock inflows amounted to $1 billion. ETF inflows have rebounded from September lows to near the 12-month average, while individual stock inflows are at the 43rd percentile.

The ETF inflow percentile for the technology sector has risen from 4% four weeks ago to 73%. Technology stocks excluding the Mag7 are also strengthening, with SNKD and MU ranking as the third and fourth most bought individual stocks last week. Retail investors are net buying across semiconductors, hardware, and software.

J.P. Morgan noted that retail investors bought into themes such as AI data centers, electrification, Mag7, growth, AI software, and monetization. International ETF activity remained limited, with volatility in France and Brazil not triggering large-scale portfolio rebalancing. ETF inflows rebounded broadly across broad-market, style, and fixed-income categories, with the exceptions of commodity and crypto ETFs.

Among the Mag7, retail investors bought $834 million in NVIDIA, $265 million in Google, $122 million in Tesla, $81 million in Amazon, $34 million in Microsoft, and $34 million in Meta, while selling $15 million in Apple.

The top five bought stocks were NVIDIA at $834 million, Google at $265 million, SNDK at $150 million, MU at $135 million, and STX at $129 million. The top five sold stocks were SPCX at $177 million, INTC at $148 million, MRVL at $54 million, SMCI at $51 million, and MRNA at $48 million. The technology sector had a net buy of $602 million, while industrials had a net buy of $143 million. Communications, financials, healthcare, and materials experienced net sells.

Google's purchase occurred on October 6. Constellation Energy announced a 20-year power purchase agreement with Google, adding 890 MW of nuclear power, along with a 15-year agreement for an additional 2,700 MW of existing nuclear power. Previously, Constellation Energy signed a 20-year agreement with Amazon for 690 MW from the Cliffs Clean Energy Center. On the same day, Vistra rose 15%, following reports that the U.S. government plans to provide approximately $4.2 billion in loans to upgrade three nuclear power plants.

The Q3 earnings season kicks off on Tuesday. Consensus expectations call for a 31% increase in earnings, or 27% excluding energy. Revenue is expected to rise 12%, or 11% excluding energy. Earnings growth across all sectors outpaces Q3 25, with energy and technology leading and consumer staples lagging. FY26 estimates have been steadily declining since early September.

Approximately 5% of the S&P 500 market cap will report earnings over the next seven days, primarily concentrated in the financial sector. J.P. Morgan analysts believe large banks, which have recently underperformed, present a pre-earnings rebound opportunity, with improved expectations for net interest income and potentially stronger trading revenues. Retail investors have not yet shown significant buying activity in financial ETFs or individual stocks despite their recent weakness.

In Brazil, Flavio Bolsonaro led Lula in the first round of voting; EWZ rose 13% on Monday as retail investors took profits, selling $6.6 million. J.P. Morgan strategists believe the index could rise up to 20% in the short term, with a forward P/E revaluation of approximately 20% to 25%, reaching 11 times. Retail investors also sold Brazilian ADRs including NU, PBR, and VALE.

The momentum factor performed strongly in September. The top 20 momentum stocks rose approximately 12%, the top 30 rose 10%, and the top 100 were essentially flat. Lagging stocks weakened overall, with the bottom 100 declining about 11% and the bottom 20 falling around 12%. Crowding among lagging stocks dropped to 20%, down from about 47% at the end of August. Crowding among large-cap stocks is at the 84.6th percentile.

In the meme stock space, socially热议 stocks like KURA, PVLA, and CABO simultaneously attract retail buying and high short interest from hedge funds. KURA saw $500,000 in buying last week, with short interest at approximately 8% of float. PVLA saw $700,000 in selling, with short interest around 25%. CABO saw $100,000 in selling, with short interest at roughly 20%. Such stocks can experience unexpected capital flows when trading activity surges.

On the software side, Synopsys set a target of a 15% compound annual revenue growth rate from FY26 to FY30E at its Investor Day, with an operating margin of approximately 50% in FY30E, compared to the current FY26E guidance of about 41.5%. J.P. Morgan analysts believe this target implies approximately $35 in earnings per share by FY30E, representing a compound annual growth rate in earnings per share of just over 20%. The company also announced a $1 billion share repurchase authorization.

PTC was acquired by Schneider Electric for $205 per share in cash, valuing PTC’s equity at approximately $22.6 billion and its enterprise value at approximately $23.7 billion, equivalent to about 21 times 2027E EBITDA or 13 times including all synergies. PTC rose 33% on Monday. Robinson Global Logistics fell 11% after announcing its acquisition of RXO; J.P. Morgan analysts consider the $300 million net cost synergy credible, but negative revenue synergies are the primary concern.

Retail capital has rebounded from its September low, with technology back in the spotlight. The sustainability of this rotation will be tested by earnings season; profit realization and interest rate trends are the key factors to watch. Consensus earnings growth for Q3 is 31%; financials are leading the way, and whether major banks can meet expectations will determine if this capital inflow can be sustained.

Disclaimer

This article is a compilation and interpretation by Chaoxiang Research of a third-party brokerage research report (JPMorgan, October 7, 2026), combined with publicly available market information. The ratings, price targets, earnings forecasts, and related judgments cited herein reflect the views of the brokerage’s analysts and represent the position of their respective institution, not the views of Chaoxiang Research, nor do they constitute any investment advice.

The market carries risks; make decisions independently. This article should not be used as a basis for buying or selling any securities.