STAX Trends: Buying the AI Dip, Breaking Records

Gen X (born 1965 to 1980) led the pack once again in October. Their STAX score surged 5.99% month over month to a record high of 71.48. While Gen X has consistently been the most bullish generation since Schwab began tracking generational STAX scores, the gap between them and younger generations narrowed over the summer. However, the "middle child" generation has returned to form this fall, repeatedly showing their willingness to buy stock market dips.

Baby Boomers (born 1946 to 1964) also flexed their muscles last month. Their STAX score jumped 5.56% from September to a record 62.85. While past generations have tended to become more conservative investors as they approached or entered retirement, Schwab's Baby Boomer clients continue to demonstrate a relatively high risk tolerance. The Silent Generation (born before 1946) took a similar risk-on approach last month, with their STAX score rising 4.35% month over month to a record 60.52.

Younger generations—who continue to struggle with housing affordability and stagnant real wage growth—were slightly less bullish. They still posted record STAX scores last month, but their previous records were generally surpassed by narrower margins. Millennials (born 1981 to 1996) saw their STAX score rise 3.74% month over month to 60.21. Gen Z (born 1997 to 2012) notched a STAX score of 48.90, up 4.04% from September. And Gen Alpha's (born 2013 to 2024) STAX score reached 50.18, up 4.85%. (Note: A significant portion of Gen Alpha's trading is likely done by guardians, who could be more risk-averse with their dependents' money.)

The bullish buying streak seen across generations in October's STAX report clashes with recent investor sentiment surveys. For example, in the final week of October, Schwab client buying activity surged, but just 37.8% of investors surveyed that week by the American Association of Individual Investors said they were bullish, while 41.4% said they were bearish.

Looking at STAX scores by assets under management (AUM), ultra-wealthy clients continued to be the most bullish. However, nearly every AUM tier saw its STAX score rise to a record high in October as clients doubled down on the bull market despite a slew of potential headwinds. Only those with between $2,000 and $10,000 at Schwab narrowly missed setting a record high STAX score.

Schwab clients' top net buys in October may surprise many market watchers. Despite the broad rotation out of tech last month, all top five net buys were AI-linked tech stocks. Space Exploration Technologies (SPCX) topped the list, even as it dipped below its $135 initial public offering (IPO) price. Nvidia (NVDA) took the second spot despite slipping more than 10% during the month. Alphabet (GOOGL) placed third even amid concerns about AI disrupting its core search business. And the once red-hot, but now wavering, Micron Technology (MU) and Intel (INTC) rounded out the top five as clients looked past fears about a potential slowdown in the AI boom.

Outside the top five, there was a similar pattern of dip-buying in AI-related stocks. Broadcom (AVGO) and Amazon (AMZN) just missed out on making the top five net buys list for the second straight month. Clients were also net buyers of Taiwan Semiconductor Manufacturing Company (TSM), Marvell Technology (MRVL), and SanDisk (SNDK). Meanwhile, Advanced Micro Devices (AMD) and Meta Platforms (META) flipped from being on the top five net sell list in September to being in the top 10 net buy list in October.

Clients also bought the dip in CoreWeave (CRWV) and Nebius Group (NBIS) after both stocks sold off amid mounting debt concerns. The leading neocloud providers—which lease compute to power AI workloads—saw their bond yields and credit default swap spreads surge last month amid a crisis of confidence in the debt-funded AI buildout.

A Gartner report also spooked neocloud investors by predicting more than 80% of neocloud providers would cease operating independently by 2030 due to cost pressures and lack of differentiated business models. An Elon Musk post that warned of "guppy-level death and consolidation" in the neocloud industry added to the anxiety, but Schwab clients were still net buyers of CoreWeave and Nebius, particularly during the final week of the month.

"Clients continued to buy AI-related stocks, including CoreWeave and Nebius, even as prices declined fairly dramatically," said Mazzola. "Some may have viewed lower prices as an opportunity, even as questions about debt and future revenues remained. That activity tells us where clients were putting money to work, not that those concerns had been resolved."