Morgan Stanley analysts, in a client note released on Wednesday, identified Nvidia as the most under-owned large-cap technology stock after a review of fourth-quarter 13F filings.
The bank reported that mega-cap technology stocks collectively represent their largest under-ownership relative to the S&P 500 in 17 years, with the aggregate ownership gap versus the index expanding to -155 basis points at the end of the quarter.
Analyst Erik Woodring quantified the divergence at the individual-stock level, saying Nvidia had the greatest negative gap between its S&P 500 weighting and active institutional ownership, at -2.57 percent. Comparisons among other headline names showed Apple at -2.16 percent, Microsoft at -2.13 percent and Amazon at -1.37 percent.
Woodring interpreted the positioning as evidence of an institutional preference emerging as 2026 approaches: managers appear to be favoring companies that provide hardware and semiconductor exposure tied to artificial intelligence infrastructure. He pointed to relatively high institutional ownership among semiconductor and hardware-related tickers such as SNDK, KLAC, WDC, LRCX and STX.
By contrast, the note identified notably low active positioning in several large software names, listing IBM, ORCL, PANW, NOW and ADBE as examples where institutional ownership trails benchmark weightings.
The analyst added that the under-ownership gap widened only modestly from the prior quarter, a sign that investors have generally continued to lag the sector’s benchmark weightings rather than move rapidly to close those shortfalls.
Morgan Stanley’s commentary also singled out SNDK for its rising institutional ownership since its re-listing in the first quarter of 2025. After SNDK joined the S&P 500 last quarter, it registered the largest over-ownership gap among large-cap technology stocks at +1.58 percent.
The data and observations in the note focus specifically on relative institutional positioning revealed in regulatory 13F filings for the fourth quarter and on the differences between those positions and S&P 500 benchmark weightings.
What this means for markets and sectors
- Institutional flows appear to be shifting in favor of semiconductor and hardware suppliers tied to AI infrastructure.
- Large software companies are relatively underweighted by active institutions, according to the bank’s analysis of 13F filings.
- SNDK stands out as an example of a stock that has become over-owned following its re-listing and S&P 500 inclusion.