A report released Wednesday by Vanda Research indicates that retail investors recorded their largest single-day net selling of individual stocks since the COVID-19 pandemic crash on Tuesday. Vanda Research has been tracking retail investor activity, looking for signs of re-entry into the US market amid this month's pullback triggered by volatility in AI-related trades. However, unlike past periods of aggressive buying on dips, this retail cohort appears to be adopting a more cautious stance this time around.
The selling on Tuesday was concentrated in memory chip stocks. Micron Technology, SanDisk, Seagate Technology, and Western Digital accounted for 88% of the day's total $213 million in net retail selling. According to Vanda, this year has already seen nine trading days with net selling of individual stocks by retail investors, a stark contrast to 2021, 2024, and 2025, which had no such days throughout the entire year.
After a strong rally early in the year, the popular memory chip trade has recently stumbled as the broader semiconductor sector has corrected. Data shows that SanDisk has fallen as much as 55% since July. Vanda Research noted that the average daily total trading volume of individual stocks by retail investors in 2026 hit a record high of $15.7 billion. While the volume of stock selling this year far exceeds previous years, signs suggest that retail investors are not fully exiting the market. Instead, they are increasingly shifting towards diversified exchange-traded funds that offer a "defensive alternative."
"This is becoming a common theme: sell individual stocks, buy broad-based index ETFs," Vanda stated. For example, on Tuesday, retail investors were net buyers of the Roundhill Memory ETF, which invests in global memory chip stocks. Vanda believes that retail investors are not leaving the market but are "becoming more selective." As part of a broader behavioral shift, they are "increasingly willing to reduce single-stock risk" and favor ETFs, a change that "could still put pressure on popular momentum stocks if earnings disappoint."
Meanwhile, investors are focusing on quarterly earnings reports from major tech companies this week. Microsoft and Meta Platforms are expected to report after the close on Wednesday, while Amazon and Apple are scheduled for Thursday. US stocks moved lower on Wednesday as investors closely monitored the outcome of the Federal Reserve's policy meeting.