Key Moments
- Morgan Stanley reports that mega-cap tech stocks remained under-owned by active institutional managers relative to their S&P 500 weights, with the gap widening in the second quarter to -129 basis points.
- Nvidia shows the largest underweight among large-cap tech, with a -2.53% gap versus its S&P 500 weighting, while Sandisk ranks as the most over-owned with a +2.30% premium.
- Morgan Stanley highlights a statistically significant link between low active ownership relative to the S&P 500 and subsequent stock outperformance, after controlling for market cap and earnings beats.
Institutional Exposure to Mega-Cap Tech Remains Subdued
Investing.com — Active institutional investors have continued to hold less exposure to mega-cap U.S. technology stocks than their representation in the S&P 500, and this shortfall increased over the second quarter, according to Morgan Stanley’s latest large-cap institutional ownership tracker.
The analysis spans 28 large-cap technology companies within Morgan Stanley’s U.S. technology equity research coverage and uses 13F filings for the top 100 actively managed institutional portfolios as its data set.
The aggregate gap between institutional ownership and S&P 500 index weight for mega-cap tech widened to -129 basis points at the end of the second quarter, compared with -125 basis points at the close of the first quarter.
Nvidia Leads Under-Owned Names; Apple, Microsoft, Amazon Follow
Nvidia remains the most under-owned large-cap tech stock in Morgan Stanley’s framework. The difference between Nvidia’s S&P 500 weighting and its active institutional ownership increased by 14 basis points on a quarter-over-quarter basis, reaching -2.53%, described as being near all-time highs.
Apple is the next most under-owned at -2.33%, followed by Microsoft at -1.54% and Amazon at -1.29%, underscoring a broad underweight across several of the largest benchmark constituents.
Non-Mega-Cap Tech Skews Over-Owned
Outside the seven mega-cap technology names, the remaining 21 large-cap tech stocks in the study are, on balance, over-owned by active managers. Morgan Stanley said the spread between institutional ownership and S&P 500 weights for this group stood at +39 basis points, up from +32 basis points in the first quarter.
| Category / Stock | Ownership vs. S&P 500 Weight | Comment |
|---|---|---|
| Mega-cap tech (aggregate) | -129 bps | Gap widened from -125 bps in Q1 |
| Nvidia | -2.53% | Most under-owned; gap widened by 14 bps QoQ |
| Apple | -2.33% | Second most under-owned large-cap tech |
| Microsoft | -1.54% | Under-owned vs. S&P 500 weighting |
| Amazon | -1.29% | Under-owned vs. S&P 500 weighting |
| Non-mega-cap tech (aggregate) | +39 bps | Over-owned; up from +32 bps in Q1 |
| Sandisk | +2.30% | Most over-owned large-cap tech stock |
Sandisk Emerges as the Most Crowded Large-Cap Tech Position
Within individual stocks, Sandisk stands out as the most “over-owned” large-cap tech name. Its institutional ownership exceeds its S&P 500 weighting by +2.30%, which Morgan Stanley said is roughly 1.5 times the premium of KLA, the next most over-owned stock.
Sandisk’s active institutional ownership has been rising steadily since its re-listing in the first quarter of 2025. That premium has remained elevated even after the company was added to the S&P 500 in the fourth quarter of last year.
Lam Research and Western Digital also feature among the most over-owned names in the large-cap technology cohort.
Preference for Memory and Storage Plays Over Software
Morgan Stanley observed a distinct tilt in institutional positioning within the technology complex.
“Institutional active manager ownership remains notably high (vs. the S&P 500) in large cap memory/storage-related names… but notably low in software stocks,” including IBM, Oracle, Palo Alto Networks, ServiceNow and Adobe, Morgan Stanley said. The bank sees this as “a continued clear institutional bias towards AI ‘picks and shovels’ / bottlenecks.”
Ownership Skews and Their Implications for Performance
Morgan Stanley also examined how these ownership imbalances relate to forward returns.
After adjusting for market capitalization and earnings beats, there is “a statistically significant relationship between low active ownership relative to the S&P 500 and future stock performance,” the firm continued, with under-owned stocks tending to see a technical pull higher, and over-owned stocks the reverse.
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