By Alexander Osipovich | Photographs by Jessica Pons for The Wall Street Journal

Trading slivers of individual shares has become a fervent pursuit for thousands of individual investors, amplifying the 2020 rise of pricey yet popular stocks like Amazon.com Inc. and Tesla Inc.

Fidelity Investments, which rolled out fractional trading to customers in January and February, says more than 340,000 of its accounts have placed a fractional trade, in which the customer buys or sells less than an entire share. Interactive Brokers Group Inc., another online brokerage, says around 117,000 users have enabled fractional trading since the firm released the feature to individual investors in November. Charles Schwab Corp. says more than 60,000 accounts have bought its "Stock Slices" since it turned on the feature in June.

Fractional trading has become widespread as stock splits have fallen out of favor among some of America's hottest companies and the coronavirus pandemic has intensified the appeal of top technology companies, pushing share prices of many market leaders into the hundreds or thousands of dollars.

One of the most discussed trends in markets this year has been individual investors' renewed embrace of stocks, fueled in part by coronavirus-fueled volatility and free trading apps like the one from Robinhood Markets Inc. Proponents say fractional trading has helped democratize access to the stock market.

But it may be encouraging risky speculation that some analysts and academics warn will end with many individual investors losing money. The S&P 500 has surged nearly 50% since March, despite a rise in U.S. unemployment and other significant, unresolved economic problems.

"I can buy stock in companies I could never afford," said Jacob Gonzalez, 34 years old, who trades fractional shares on Fidelity and Robinhood. "I've got Tesla now. I've got Amazon."

In about 80% of fractional trades, Fidelity says, the customer specifies a dollar amount -- for instance, spending $500 to buy a slice of a share of Amazon, which closed at $3,225.00 a share on Thursday.

Fidelity customers can also specify what percentage of a share they want to buy.

Robinhood wouldn't disclose how many customers use fractional trading, but it says millions of people joined a wait list for fractional trading after the company unveiled plans for the feature in December. Since then, the most popular stocks for fractional trading at Robinhood have been Tesla, Amazon, Apple Inc., Microsoft Corp. and Netflix Inc., a company spokeswoman says. Shares of those companies are each up at least 37% this year, compared with a 3.7% rise in the S&P 500.

Mr. Gonzalez, a resident of Chino Hills, Calif., said he lost his information-technology job in March and has less than $10,000 in his portfolio. He recently began doing deliveries for food-delivery service DoorDash. A proponent of cannabis legalization, Mr. Gonzalez said he often spends $4.20 on stock purchases. The number 420 is a popular slang code for cannabis consumption among marijuana enthusiasts.

Kelli Hernandez, a 31-year-old in Salem, Ore., joined Robinhood this year and bought stocks including Novavax Inc., which is developing a coronavirus vaccine. In June, Robinhood gave her access to fractional trading. Ms. Hernandez, who works as an operations manager in a nursing home, has used the feature to add more Novavax -- whose share price has surged this summer -- and to invest in Amazon, Apple and Netflix.

"If I could turn that around and buy a nice rocking chair for my nursery, that would be a win for me," said Ms. Hernandez, who is expecting a baby this fall.

The ability to hold fractional shares isn't new. Investors have been able to amass portions of shares for decades through dividend-reinvestment plans, in which a company's dividend payouts are plowed back into purchases of its shares. What is new is the ability to freely trade partial shares during market hours. Brokers like Fidelity and Robinhood can now execute fractional orders immediately, much as they execute ordinary orders to trade stocks or exchange-traded funds.

Research has shown that trading frequently isn't good for investors, and a simple buy-and-hold strategy works best over the long run. Fractional trading will likely tempt some novice investors to try stock picking, said Terrance Odean, a finance professor at the University of California, Berkeley. Still, he added, that shouldn't be excessively risky, because such investors generally buy small quantities of stock.

"Will this encourage some speculation? Probably some," Mr. Odean said. "But it's going to be speculation with a lot less money than if people were forced to buy whole shares."

Besides the big online brokerages, an array of financial-technology startups offer fractional trading, including M1 Finance LLC, Social Finance Inc. and Square Inc. One app based on fractional trading, Public.com, is backed by investors including Hollywood actor Will Smith's venture-capital firm and National Football League star J.J. Watt.

Not all apps work the same. M1 and Social Finance's SoFi app execute fractional trades only once or twice a day, accumulating customer orders to buy or sell slices of stock and executing them together. That exposes investors to the risk that a stock price could swing sharply in the hours between when the order is placed and when it is filled.

An M1 spokesman said the firm caters to long-term investors and its approach discourages unproductive trading. A Social Finance spokesman said the firm was working on supporting real-time execution.

Write to Alexander Osipovich at alexander.osipovich@dowjones.com