AI and tech investments, and market volatility: what’s happening and what it means for your pension

Global markets have been volatile in the past week, driven by shifting sentiment in Artificial Intelligence (AI) and technology stocks.

Investing in AI companies - known as the ‘AI trade’ - has been the dominant market theme in recent history. 

But lately, AI and tech stocks have dropped notably. That’s impacted global markets, a story that’s been all over the news. 

You might have seen that reflected in your pension balance. As markets fall, your pension’s value may have dipped too, and may continue to fluctuate if markets remain volatile. 

But before you react to this news, it’s worth taking a beat, understanding what’s happening, and keeping your long-term goals in mind.

What’s happening?

In recent years, the AI trade has driven notable returns, especially in the US. 

On 30 November 2022, the launch of ChatGPT brought AI into the mainstream. Between then and 2 November 2026, the S&P 500 - an index of the 500 largest companies in the US - rose around 85%. 

That’s been largely driven by the rising valuations of so-called ‘hyperscalers’, big tech companies building AI infrastructure and products. They’re businesses you’ll recognise, such as Alphabet (Google’s parent company), Amazon, and Microsoft.

Alongside this group, other companies that serve them have grown considerably. These businesses might build the components, like chips or semiconductors, that AI needs to run. Or they might provide the computing power to carry out the AI functions.

That includes businesses like Nvidia in the US, ASML in the Netherlands, Samsung and SK Hynix in Korea, and TSMC in Taiwan. The valuations of these businesses have also all grown as the AI companies have expanded.

However, investors are now concerned about these investments, bringing their valuations down and impacting global markets as a whole.

Why are markets volatile?

Investors have expressed some concerns about the AI trade.

These factors have been building throughout the year, with a recent sell-off triggered by the outcome of the US midterm elections.

President Trump’s Republicans lost control of both chambers of Congress. Now, the Democrats have majorities in the House of Representatives and the Senate.

Democrat politicians have been critical of the AI hyperscalers. They cite environmental concerns, particularly around water use, and the effect of building giant data centres in local communities as reasons to regulate the sector.

That could slow the pace of AI development, making it even more difficult for these companies to make meaningful profits and a return on their spending.

What this means for you and your pension

With major stock markets feeling the impact in the wake of the sell-off, you may have seen your pension dip in value, and it may continue to move around with market volatility.

As it’s been the biggest investment trend over the past few years, most pension funds will invest in the US technology companies.

They might hold those investments themselves. Or they could have exposure through global funds, which will also invest in these companies as they account for such a large part of the market.

So, it’s possible that you’ll have seen movement in your pension balance.

However, it’s worth keeping two things in mind.

1. Your pension is diversified

Your pension savings will usually be ‘diversified’ - that means spread across a range of companies, regions, and asset classes. 

So, although the part that’s exposed to US technology might have dipped, that could be cushioned by gains elsewhere.

2. Your pension is for the long term

Markets rise and fall over time, and pensions are built for the long term. So, although it might be unsettling to see your balance fall, remember that it’s important to remain patient during times of volatility.

Historically, when markets drop, they can often rally. As a result, withdrawing or changing investments can see you miss out on the recovery that could follow the drops.

In fact, this started to happen within 24 hours of this latest period of volatility. The tech-heavy Nasdaq index fell by 5.5% in the initial sell-off on 5 November. But by lunchtime on 6 November, it had already recovered 1.7% since the market opened.

There are no guarantees with investing, and what’s happened in the past might not happen in the future.

But this rise shows how short-lived volatility can be.

By staying invested, you could be well-positioned to benefit when markets recover. 

Summary

While unsettling, market volatility is part of investing and trying to grow your wealth for the future. 

Understanding why markets are moving and what that means in the long term can help you keep steady and stay on track toward your future goals.

Check where your money’s invested on our Plans page or log in to your online account (your ‘BeeHive’) to see your specific plan.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.