Mega-cap technology stocks remain under-owned by active institutional investors compared with their weight in the S&P 500, according to Morgan Stanley’s latest institutional ownership analysis.
The gap widened during the second quarter, suggesting that many large investment managers still hold less exposure to the biggest technology companies than their benchmark weightings would imply.
Morgan Stanley’s analysis covers 28 large-cap technology stocks within its U.S. equity research universe and is based on 13F filings from the 100 largest actively managed institutional portfolios.
Mega-Cap Tech Remains Under-Owned
The difference between institutional ownership and S&P 500 weighting among mega-cap technology stocks widened to -129 basis points at the end of the second quarter.
That compares with -125 basis points at the end of the first quarter.
The shift indicates that active institutional managers became slightly more underweight the largest technology stocks during the period.
Nvidia Is the Most Under-Owned Large-Cap Tech Stock
Nvidia remains the most under-owned large-cap technology stock in Morgan Stanley’s analysis.
The gap between Nvidia’s S&P 500 weighting and its institutional ownership widened by 14 basis points quarter-over-quarter to -2.53%. That level remains close to historical extremes.
Apple ranks second with an ownership gap of -2.33%.
Microsoft follows at -1.54%, while Amazon carries a -1.29% gap between benchmark weighting and active institutional ownership.
These figures suggest that some of the largest companies in the S&P 500 remain significantly underrepresented in actively managed portfolios.
Smaller Large-Cap Tech Stocks Are Over-Owned
The picture changes when the seven mega-cap technology companies are excluded.
The remaining 21 large-cap technology stocks tracked by Morgan Stanley are moderately over-owned relative to their S&P 500 weightings.
Their combined ownership premium increased to +39 basis points during the second quarter, up from +32 basis points in the previous quarter.
This highlights a noticeable difference in how institutional investors are positioned across different parts of the technology sector.
Sandisk Stands Out as the Most Over-Owned Stock
At the individual-stock level, Sandisk is the most over-owned large-cap technology company in the group.
Its active institutional ownership exceeds its S&P 500 weighting by 2.30%.
That premium is roughly 1.5 times larger than the gap for KLA, which ranks as the next most over-owned stock in Morgan Stanley’s analysis.
Institutional ownership of Sandisk has risen steadily since the company was re-listed during the first quarter of 2025.
The ownership premium has also remained elevated following Sandisk’s addition to the S&P 500 during the fourth quarter of last year.
Lam Research and Western Digital are also among the most heavily over-owned technology names.
Institutional Investors Favor AI Infrastructure Stocks
Morgan Stanley identified a broader trend within institutional portfolios.
Active managers continue to hold relatively high exposure to large-cap memory and storage companies, while ownership remains comparatively low across several software stocks.
IBM, Oracle, Palo Alto Networks, ServiceNow and Adobe are among the software companies where institutional positioning remains relatively light.
Morgan Stanley said the trend points to an ongoing institutional preference for companies that provide the infrastructure, equipment and other critical components supporting the artificial intelligence boom.
In other words, investors continue to favor the so-called AI “picks and shovels” segment of the technology market.
Could Under-Owned Stocks Outperform?
Morgan Stanley also found a potentially important relationship between institutional ownership and future stock performance.
After adjusting for factors such as market capitalization and earnings surprises, the bank identified a statistically significant connection between low active ownership relative to the S&P 500 and subsequent share-price performance.
According to the analysis, under-owned stocks have historically tended to receive a technical boost as institutional positioning increases.
Conversely, heavily over-owned stocks may face greater downside pressure if investors begin reducing crowded positions.
The findings could therefore make institutional ownership an important factor for investors monitoring stocks such as Nvidia and Sandisk.
While ownership positioning alone does not determine future returns, Morgan Stanley’s data suggests that extreme underweight or overweight positions can become meaningful technical drivers when institutional portfolios begin to rebalance.
