Key Takeaways
- Active fund managers hold Nvidia at 2.53% below its S&P 500 index weight, making it the most under-owned large-cap technology name
- Mega-cap tech under-ownership expanded to negative 129 basis points during Q2 2025, increasing from negative 125 basis points the previous quarter
- Sandisk commands the highest over-ownership position at 2.30% above its benchmark weighting
- BofA identifies Nvidia’s upcoming August 26 earnings release as critical, setting fair value at $267.97 with street estimates above $300
- Fiscal revenue at Nvidia surged from $60.9 billion in 2024 to $215.9 billion in 2026, marking 70.7% annual growth
Major institutional portfolio managers continue to underweight Nvidia relative to its S&P 500 benchmark position, fresh Morgan Stanley ownership analysis reveals. The underweight bias among mega-cap technology holdings deepened to negative 129 basis points by second quarter end, compared with negative 125 basis points at first quarter close.
These findings emerge from regulatory 13F disclosure documents covering the largest 100 actively managed institutional funds across 28 major technology companies.
Nvidia claims the number one spot among under-owned positions, showing a negative 2.53% differential between benchmark allocation and actual institutional holdings. This underweight position expanded 14 basis points from the prior quarter and approaches record territory. Apple registers at negative 2.33%, with Microsoft at negative 1.54% and Amazon at negative 1.29%.
Morgan Stanley observers highlighted that software sector holdings remain particularly light among institutional portfolios. Names including IBM, Oracle, Palo Alto Networks, ServiceNow and Adobe rank among the most underweight versus index allocations. The firm characterized this positioning as reflecting “clear institutional bias towards AI picks and shovels and bottlenecks.”
Sandisk Commands Highest Overweight Position
Flipping to the opposite end of the spectrum, Sandisk holds the distinction of most over-owned large-cap technology stock at positive 2.30% versus S&P 500 allocation. This premium runs approximately 1.5 times larger than KLA, which claims second place for overweight positioning.
Sandisk’s institutional popularity has risen consistently following its first quarter 2025 re-listing event. The ownership premium persisted even following the company’s fourth quarter inclusion into the S&P 500 index. Lam Research and Western Digital similarly appear among heavily over-owned positions.
Morgan Stanley research indicates statistically significant correlation between reduced active ownership levels and subsequent equity performance, suggesting under-owned equities typically experience technical support over extended periods.
August 26 Nvidia Report Draws Scrutiny
As Nvidia prepares for its August 26 quarterly announcement, Bank of America positions the event as a pivotal inflection point. The firm’s intrinsic valuation model produces $267.97 per share, implying 19.1% appreciation potential from the recent $225.01 trading level. Wall Street analyst consensus targets reach $320.
Nvidia’s top-line performance has expanded nearly fourfold across two fiscal periods, accelerating from $60.9 billion during fiscal 2024 to $215.9 billion in fiscal 2026. Operating cash generation after capital expenditures jumped from $27 billion to $96.7 billion across this identical timeframe.
The chipmaker has pledged $105 billion toward OpenAI operations and participates in a $500 billion private investment alliance targeting artificial intelligence infrastructure alongside Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR.
Bank of America analysts cautioned that should artificial intelligence growth decelerate, the company’s 24.9 times forward earnings multiple and concentration among lower-grade counterparties could present downside risks. The August 26 management discussion should provide enhanced transparency regarding these off-balance-sheet obligations.
Nvidia maintains a 55.6% net profit margin alongside a conservative 6.6% debt-to-equity ratio.
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