• Many of these meme stocks have fared far worse than the Russell 2000 index, which has edged lower by 0.8% over the past five trading sessions.
• In this period, Beyond Meat shares have declined nearly 20%, Opendoor Technologies tumbled 17%, and SoundHound AI fell 8%.

U.S. equities have had a rollercoaster week, with investors exercising caution amid concerns about overinvestment in AI. Beyond large-cap and Big Tech, there has been a correction in small-cap and meme stocks, some of which are retail favorites.

Many of these meme stocks have fared far worse than the Russell 2000 index, which has edged lower by 0.8% over the past five trading sessions. In this period, Beyond Meat Inc. (BYND) shares have declined nearly 20%, Opendoor Technologies Inc. (OPEN) tumbled 17%, and SoundHound AI Inc. (SOUN) fell by 8%.

The year-to-date performance of these stocks shows a larger decline.

The Outlier – Opendoor Technologies

The only outlier among these companies is Opendoor Technologies, which has performed significantly better than all the other stocks listed above and the Russell 2000 index.

The notable difference here is that the Opendoor stock started climbing in July, after hedge fund manager Eric Jackson disclosed a position in the company in a post on X.

Jackson announced on July 14 that his firm, EMJ Capital, had taken a position in Opendoor. The stock has gained 769% since Jackson's disclosure.

Wall Street Turns Cautious

Analysts at Schwab said in a recent note that the market remains firmly in risk-off mode, as Nvidia's solid results weren't enough to convince investors that AI exuberance can continue.

According to a MarketWatch report, Fundstrat's Tom Lee noted that the next two weeks could be choppy for U.S. equities. 

Lee pointed to a post by President Donald Trump on Truth Social that called out Democratic lawmakers for instructing members of the military to refuse unlawful orders. He said this could have“rattled the markets a bit.”

Retail Investors Step Back

Retail investors have taken a step back, even as institutions remain enthusiastic buyers. According to a Reuters report citing analysts at Bank of America, institutions were net buyers of broad-market ETFs earlier this month. However, retail investors were net sellers for the first time since September, according to the firm.

The Schwab Trading Activity Index, which measures retail investor sentiment, has declined since January, from 49.45 to 39.68, before staging a recovery to 48.12.

Meanwhile, U.S. equities were up in Friday's midday trade. At the time of writing, the SPDR S & P 500 ETF (SPY), which tracks the S & P 500 index, was up 1.16%, the Invesco QQQ Trust ETF (QQQ) gained 0.91%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) rose 1.43%. Retail sentiment around the S & P 500 ETF on Stocktwits was in the 'bearish' territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.2% at the time of writing.

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