Did Investors Rotate Toward AI? Stock Returns and Trading Activity in the S&P 500 after ChatGPT, 2021–2025

This empirical finance paper examines whether equity investors rotated toward AI companies following OpenAI's launch of ChatGPT on November 30, 2022, or if repricing occurred gradually. Using daily market data from 2021 through 2025 across 40 S&P 500 constituents comparing 20 AI-exposed firms against 20 non-AI control firms, with 15 non-AI technology firms as a robustness group the author assesses price and volume dynamics through event studies, difference-in-differences regressions, GARCH models, and out-of-sample forecasting.The study finds no statistically significant abnormal return gap on the launch day of ChatGPT. Instead, market repricing concentrated around later milestones demonstrating tangible demand: the release of GPT-4 in March 2023 and Nvidia's May 2023 revenue guidance. While AI firms exhibited a 0.20 percentage point daily return advantage over the full post-launch period and a 65% increase in dollar trading volume, the outperformance was concentrated in 2023 and failed parallel-trends tests. Moreover, the return gap disappears when benchmarked against semiconductor and tech index funds (SOXX and QQQ) and cannot be forecasted beyond a random walk. The evidence indicates that market adjustment to generative AI unfolded as a multi-stage, gradual repricing driven by sector momentum and recovery from the 2022 drawdown rather than an immediate structural rotation.