Retail investors are regaining confidence in the US market’s long-term potential after two quarters of decline and have increased their exposure, according to the latest quarterly Retail Investor Beat from online broker eToro.

The research, which surveyed 10,000 retail investors across 12 countries, reveals that 38% now view the US as the region with the strongest long-term return potential, an increase from the previous quarter. This reverses the trend of consecutive declines of 9% in Q1 and 17% in Q2.

This confidence is also reflected in retail investors’ portfolios – 43% now have exposure to the US market, an increase from the previous quarter and a record high since the start of eToro’s Retail Investor Beat in Q1 2023.

When asked how they believe the so-called ‘Magnificent 7’ (Amazon, Apple, Microsoft, Meta, Tesla, Nvidia and Alphabet) will perform as a group in 2025, retail investors expressed a measured outlook. 13% expect these stocks to significantly outperform the market, while 33% believe they will only slightly outperform.

The data revealed that the number of investors planning to reduce their investments has increased marginally across all the ‘Magnificent 7’ stocks compared to a year ago – Meta, Apple, Nvidia and Tesla each saw a 2 percentage point increase, while the remaining firms experienced a rise of 1 percentage point.

Retail investors have also slightly decreased their exposure to all of these major US tech stocks.

Notably, the number of investors who aren’t invested in or don’t plan to invest in Tesla increased by 6 percentage points. Only Meta, Alphabet and Nvidia experienced a marginal rise in the proportion of investors planning to increase their investments.

Whereas retail investors continue to prepare for a potential long-term weakening of the USD, with 50% having adjusted or planning to adjust their portfolios (up from 48% in the previous quarter), the majority (83%) have confidence in the US dollar remaining the global reserve currency for the next 10 years, whether they believe the dollar will weaken (33%), strengthen (22%) or remain stable (28%).

Only 7% of retail investors believe the US dollar will lose its global reserve status within the next decade. Of those 25% back bitcoin, the Chinese yuan, or the euro respectively, followed by gold (23%) and central bank digital currencies (16%).

The latest Retail Investor Beat reveals that recession fears are easing. While the global economy and a potential recession remain retail investors’ top perceived threat to their portfolio, concern has fallen from 26% in Q2 to levels seen a year ago (23%). Inflation remains in second place at 19%.

In contrast, 14% of investors now see their home economy as the biggest risk, up from 11% last quarter. Taking a country by country view, US investors are the most concerned (28%), followed by the UK (20%), Australia (17%) and France (15%), while Germany, Spain, and Italy remain below the average at 12% each.

eToro’s Global Market Strategist Lale Akoner, said:

“Inflation, meanwhile, remains a key concern, but has stabilised. This suggests retail investors are adjusting to a higher-for-longer environment and shifting their focus from systemic global shocks to local economic dynamics. The overall mood is cautious but increasingly pragmatic.”