The Evolution of Activist Investing: AI and Retail Investors Transform Shareholder Activism

This analysis is based on John O’Connell’s interview at Charles Schwab’s 2025 IMPACT conference [1], where he discussed his book “Rise of the Activist Investor” and highlighted how activist investors serve as market stabilizers by identifying and supporting companies with solid fundamentals that have been unfairly beaten down by market forces. The interview reveals a fundamental transformation in shareholder activism driven by technological democratization and retail investor empowerment.

The shareholder activism industry is experiencing unprecedented growth in 2025, with Barclays reporting a record 61 campaigns launched in Q3 alone, setting a new high and defying typical seasonal patterns [2]. Year-to-date, 2025 represents the busiest year on record with 191 campaigns, up 19% versus the long-term average [2]. Lazard’s mid-year analysis confirms this trend, reporting 150 new campaigns globally in H1 2025—on par with last year’s record pace and 23% above the five-year average [3].

The surge in activism reflects broader market dynamics where companies facing economic challenges become prime targets for activists when their performance lags behind peers [2]. This sustained activity level demonstrates both the versatility of established activists and the growing willingness of diverse investors to employ activist strategies to unlock shareholder value [2].

The integration of artificial intelligence and social media has fundamentally reshaped the activism landscape. Digital platforms have empowered retail investors with unprecedented influence in corporate governance, enabling grassroots activism to impact boardroom decisions [4]. According to eToro’s latest Retail Investor Beat survey, 58% of US retail investors are now using AI tools to build their portfolios, with 30% specifically using AI to pick or alter investments—a 75% increase year-over-year [5].

Notable examples of innovative communication strategies include Elliott Management’s podcast series “Stronger Southwest” during their campaign at Southwest Airlines, and Disney’s animated video featuring Professor Ludvig Von Drake to communicate with its retail investor base [2]. These approaches represent a new evolution in activist communication strategies that leverage modern media channels.

Gen Z investors are driving a new era of shareholder activism, with 54% expressing a desire to influence corporate behavior, including sustainability, governance, and executive compensation—contrasting with only 30% of Baby Boomers [7]. This generational shift reflects more values-aligned and fundamentals-focused investing approaches, where retail participants are increasingly strategic and aware of their collective influence [7].

The traditional dominance of institutional investors is being challenged as the largest passive investors—BlackRock, State Street, and Vanguard—have generally voted in favor of incumbent director slates in contested elections, creating opportunities for activists to build coalitions with retail shareholders [2].

The activism ecosystem has become increasingly diverse, with first-time activists accounting for 42% of all activist funds that launched campaigns during H1 2025 [3]. This influx of new participants indicates lower barriers to entry and the democratization of activist strategies, largely enabled by technology and social media platforms.

Sector concentration has intensified, with companies in Industrials, Technology, and Healthcare sectors accounting for 63% of campaign targets in H1 2025, up from 52% for the same sectors in H1 2024 [3]. Within technology specifically, targets represented 26% of North American campaigns, driven by heightened M&A activity and valuation concerns [3].

Economic challenges and uncertainties create both opportunities and risks for activist campaigns [2]. Companies struggling with tariff impacts, supply chain disruptions, or other macroeconomic pressures may become targets, but successful activism requires careful timing and strategic positioning. The analysis reveals several risk factors that warrant attention, particularly as market conditions suggest elevated volatility risk due to ongoing economic uncertainties [0].

Despite global economic uncertainty and evolving regulatory landscapes, shareholder activism has remained resilient [2]. However, changes in securities regulations, particularly around social media disclosure requirements and AI usage in investment advice, could impact future development. Companies and activists must navigate these regulatory complexities while maintaining effective communication strategies.

The demand for AI-powered investment analysis tools, social media monitoring platforms, and investor communication technologies represents significant growth opportunities [5][6]. Companies that can provide sophisticated yet user-friendly tools for retail investors and activist campaigns are well-positioned in this evolving landscape. The majority of retail investors (57%) expect AI-related stock prices to increase in 2025, reflecting confidence in both the technology sector and the tools themselves [5].

The convergence of AI tools, social media platforms, and engaged retail investors is creating a more dynamic, inclusive, and potentially more effective activism ecosystem. Social media’s role as a financial information source has grown significantly, with 36% of investors citing it as a top source for financial news, up five percentage points from 2024 [6].

For companies, the rise of democratized activism means maintaining constant vigilance and communication with all shareholder segments. Traditional investor relations strategies are insufficient in an environment where social media and AI tools enable rapid mobilization of retail support [6][7]. Companies need to develop comprehensive communication strategies that address both financial metrics and ESG concerns.

For established activist firms, the democratization trend presents both opportunities and challenges. While the growing pool of potential allies and the availability of AI tools enhance campaign capabilities, the increased competition from new entrants and the unpredictable nature of retail investor mobilization require more sophisticated strategies [2][3].

The ongoing transfer of wealth to younger generations more comfortable with technology and social media is accelerating the democratization trend [7]. Gen Z and Millennial investors’ preferences for values-aligned investing and digital communication will continue shaping activism strategies, suggesting that the transformation of shareholder activism is not merely temporary but represents a structural shift in corporate governance dynamics.