Individual investors are dumping stocks at the fastest pace since the early days of the COVID-19 pandemic, according to data from one widely followed research shop.

On Tuesday, the cohort recorded their largest day of net selling of individaul stocks since the COVID crash, Vanda Research said in a Wednesday note shared with MarketWatch.

Vanda Research has been monitoring activity among individual investors for any signs of a comeback as the U.S. stock market pulls back this month amid volatility surrounding the artificial-intelligence trade. Rather than aggressively buying the dip, as they have in the past, the retail cohort appears to be taking a more cautious approach this time around.

Photo: VANDA

“Earlier this week, we asked whether retail investors were about to stage a comeback. So far, there are very few signs of that happening. Instead, retail yesterday recorded their largest net selling of individual stocks since the COVID crash,” the Vanda team wrote in the report.

Tuesday’s selling was concentrated in memory stocks, with Micron Technology, Sandisk, Seagate Technology Holdings and Western Digital representing 88% of the net $213 million sold by individual investors in total that day, Vanda found. So far this year, they were net sellers of single stocks on nine days — in stark contrast to zero such days in 2021, 2024 and 2025, according to Vanda.

After a powerful rally earlier in the year, the red-hot memory trade has hit the rocks recently amid a broader drawdown in semiconductor names.

Individual investors have been extremely engaged in trading single stocks this year, with gross turnover averaging a record $15.7 billion a day in 2026, according to Vanda. While they’ve done much more selling of individual stocks this year than they have in the past, signs show they aren’t entirely exiting the equities market. Instead, Vanda found that they’re increasingly favoring more diversified ETFs that can provide a “defensive alternative.”

“This is turning into a common theme: sell individual names, buy broad index ETFs,” said Vanda. For example, the firm said individual investors on Tuesday were net buyers of the Roundhill Memory ETF, which invests in memory stocks globally.

The ETF has been badly beaten down this month, with its shares posting a July loss of almost 38%, according to FactSet data, at last check on Wednesday. Still, the ETF remains around 18% higher over the past three months following a torrid run-up earlier this year in memory stocks.

Single stocks are particularly volatile, with Sandisk, one of the DRAM holdings, down a stunning 55% in July, according to FactSet data, at last check.

Individual investors aren’t leaving the market; rather, “they’re turning far more discerning,” said Vanda. As part of a bigger behavioral shift, they appear “increasingly willing to reduce single-name risk” while favoring ETFs, the firm added, saying the “change that could still leave popular momentum names vulnerable if earnings disappoint.”

Meanwhile, investors will be watching this week for some Big Tech companies to report quarterly earnings, with results from Microsoft and Facebook parent Meta Platforms Wednesday after the market’s close. Amazon.com and Apple are scheduled to release their results on Thursday.

The U.S. stock market was trading lower Wednesday, with the S&P 500 down 1.5%, the Dow Jones Industrial Average slumping 2.2% and the technology-heavy Nasdaq Composite dropping 1.7%, according to FactSet data.