Analysis of Large-Cap Institutional Ownership in Mega-Cap Tech Stocks

Morgan Stanley’s analysis reveals shifting dynamics in mega-cap technology stocks regarding institutional ownership relative to their S&P 500 weighting.

Key Findings

• Under-Ownership Decreases: The under-ownership of tech stocks decreased, with Microsoft (NASDAQ:MSFT) remaining the most under-owned.
• Over-Owned Stocks: Meta Platforms (NASDAQ:META) and Intuit (NASDAQ:INTU) top the list of over-owned stocks.
• Institutional Ownership Gap: The overall gap between mega-cap tech stocks’ institutional ownership and their S&P 500 weighting narrowed by 17 basis points (bps) in Q3 2024, from -113 bps in Q2 2024 to -96 bps.

Microsoft and Other Under-Owned Stocks

• MSFT Under-Ownership: Microsoft continues to lead in under-ownership at -2.08%, despite narrowing by 34 bps quarter-over-quarter (QoQ).
• Apple’s Position: Apple (NASDAQ:AAPL) widened its gap to -1.86% in Q3 2024, highlighting its under-owned status.
• Nvidia’s Improvement: Nvidia (NASDAQ:NVDA) improved significantly, narrowing its gap to -1.4% from -2.12% the previous quarter.

Over-Owned Stocks

• Intuit and Adobe: Intuit (INTU) and Adobe (NASDAQ:ADBE) are among the most over-owned with institutional ownership surpassing their S&P 500 weighting by +0.60% and +0.37%, respectively.
• Salesforce: Salesforce (NYSE:CRM) also appears over-owned with a +0.32% gap.

Conclusion

Morgan Stanley concludes that while the under-ownership of mega-cap tech stocks has decreased, Microsoft still presents significant opportunity for investors due to its persistent under-representation compared to its S&P 500 weighting. Conversely, the over-ownership of stocks like Intuit and Adobe could indicate concentrated positioning among investors.