2026-02-19 03:15:00
Posting this ICYMI from a Wednesday note from Morgan Stanley.
Morgan Stanley says Nvidia is the most under-owned megacap as institutions lag tech benchmarks.
Summary:
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Morgan Stanley says mega-cap tech is the most under-owned in 17 years
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Nvidia is the most under-owned large-cap tech stock
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Institutional ownership lags S&P 500 weightings across major megacaps
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Investors show bias toward AI “picks and shovels” hardware names
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SNDK stands out as the most over-owned large-cap tech stock
Morgan Stanley’s latest analysis of fourth-quarter 13F filings highlights a striking positioning gap in US equities: mega-cap technology stocks are the most under-owned relative to the S&P 500 in 17 years.
According to the bank, the ownership gap versus the benchmark widened to negative 155 basis points by the end of the quarter, underscoring how active institutional managers remain structurally underweight some of the largest names in the index despite their dominant market capitalisations.
Among individual stocks, Nvidia stands out as the most under-owned large-cap technology name. Analyst Erik Woodring calculates a negative 2.57 percentage point gap between Nvidia’s S&P 500 weighting and active institutional ownership. Apple and Microsoft follow closely behind with gaps of negative 2.16% and negative 2.13%, respectively, while Amazon shows a negative 1.37% gap.
The data suggest that even after a prolonged AI-driven rally, active managers have not fully caught up to benchmark allocations in these mega-cap leaders. Woodring notes that the modest widening in under-ownership from the prior quarter implies investors continue to lag index weightings rather than aggressively rotate back into the largest constituents.
However, the positioning story is not uniform across the technology sector. Morgan Stanley sees a clear institutional bias toward AI “picks and shovels” names entering 2026. Semiconductor and hardware stocks such as SNDK, KLAC, WDC, LRCX and STX show elevated ownership levels, reflecting investor preference for infrastructure beneficiaries of AI spending. By contrast, institutional positioning in software names including IBM, ORCL, PANW, NOW and ADBE remains notably light.
One standout is SNDK, whose institutional ownership has steadily increased since its re-listing in the first quarter of 2025. After joining the S&P 500 last quarter, it now shows the largest positive ownership gap among large-cap tech stocks at +1.58%.
Overall, the note suggests active managers remain selective within technology, favouring hardware leverage to AI over broad megacap exposure — even as index concentration continues to climb.
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Persistent under-ownership in megacaps could fuel catch-up buying if performance continues. Conversely, crowded positioning in AI hardware names raises the risk of sharper pullbacks if sentiment shifts.
