Nike Earnings at Risk as UBS Cuts Price Target to $42 
Trump Bans CNN, MS NOW and Politico From White House 
White House Bars CNN, MS NOW and Politico Reporters 
Dollar Hits Two-Month High as Fed Rate Hike Bets Rise 
Telix to Acquire Germany’s ITM in $1.65 Billion Radiopharma Deal 
China Vanke Shares Jump as Beijing Moves to Ease Debt Pressure 
Asian Currencies Muted as Dollar Firms Ahead of Trump-Xi Summit 
Prysmian, Rio Tinto Supply Low-Carbon Cables for Amazon Ohio Data Center 
McDonald’s Sees Flat Traffic, Sticky Inflation as New Normal 
China’s ‘Lipstick King’ Says AI Won’t Replace Livestream Hosts 
U.S. Dollar Hits Eight-Week High After Fed Rate Hike 
Vietnam, US Trade Deal Could Be Signed Soon, To Lam Says 
OpenAI Urges US-Led Global Standards for Frontier AI 
Japan Private-Sector Growth Slows as Domestic Demand Weakens 
Volkswagen Shares Slide After 2026 Profit Outlook Cut 
Russian Envoy Dmitriev Heads to US for Ukraine Talks 
Gold Prices Rise as Oil Slump Eases Fed Rate Hike Fears 
Add as a preferred source on Google
Institutional investors appear to be shuffling their portfolios, but some of Wall Street’s largest tech giants are experiencing a curious trend. Microsoft (NASDAQ: MSFT) remains the most under-owned mega-cap tech stock among institutional investors, despite an increase in large-cap ownership during the third quarter of 2024, according to a report from Morgan Stanley.
The bank's analysis shows that the gap between mega-cap technology stocks' institutional ownership and their S&P 500 weighting has decreased by 17 basis points (bps), narrowing from -113 bps in Q2 to -96 bps in Q3. However, Microsoft remains an outlier, with a gap of -2.08%, despite seeing improvement quarter-over-quarter as the gap narrowed by 34 bps.
Microsoft Misses the Big Money
“MSFT remains the most under-owned mega cap tech stock we track,” the Morgan Stanley report stated. With its under-representation, analysts suggest that Microsoft could represent a lucrative opportunity for investors seeking to tap into undervalued holdings within the sector.
The bank identified Apple (NASDAQ: AAPL) as the second most under-owned tech stock, with its gap widening by 14 bps to -1.86% during the quarter. Nvidia (NASDAQ: NVDA), on the other hand, saw the most dramatic improvement in institutional ownership, with its gap narrowing by 72 bps to -1.4%, down from -2.12% in Q2.
Meta and Intuit Lead Over-Owned Stocks
While some mega-cap stocks remain underweight in institutional portfolios, others are perceived as overly crowded. Morgan Stanley flagged Meta Platforms (NASDAQ: META), Intuit (NASDAQ: INTU), and Adobe (NASDAQ: ADBE) as being over-owned, signaling potential risk for investors. Intuit tops the list with an ownership excess of +0.60%, followed closely by Adobe at +0.37%.
Salesforce (NYSE: CRM) also earned a spot on the over-owned list, with a +0.32% gap. Analysts warn that concentrated positioning in these stocks could leave them vulnerable to adverse market conditions.
The Opportunity in Under-Ownership
Morgan Stanley concluded that while the institutional ownership gap for mega-cap tech has decreased, Microsoft’s continued under-representation presents a compelling opportunity for investors. The bank emphasized that the tech giant's underweight status could be a strategic entry point for those looking to capitalize on its growth potential.
Conversely, the report advises caution around the over-ownership of Intuit, Adobe, and Meta, as this concentrated interest could limit upside potential.
Institutional Shifts Reflect a Changing Landscape
Nvidia’s significant improvement highlights shifting dynamics within institutional investment strategies. Once among the most under-owned, Nvidia’s rebound is seen as reflective of increased confidence in its long-term outlook, largely driven by its dominance in AI and chip manufacturing.
The Bottom Line
With Microsoft remaining under-owned despite narrowing gaps, and Meta facing concerns over over-concentration, the landscape for mega-cap tech stocks is ripe for strategic decision-making. Investors will need to weigh the risks and opportunities carefully as they navigate the complexities of institutional movements in 2024.
