Nvidia (NVDA) may be the market’s biggest AI stock, but institutional investors are still shying away.
“NVDA is now the most under-owned large-cap tech stock,” Morgan Stanley analyst Erik Woodring wrote in a note.
Though the chipmaker has grown into the world’s most valuable company, investors don’t hold it in line with its S&P 500 (^GSPC) weight. According to Woodring, Nvidia’s market value accounts for 7.37% of the index, but its share in the average active institutional portfolio is 4.2%, an adjusted underweight of 2.41 percentage points. The gap is the largest of any of the 15 major tech companies Morgan Stanley’s team tracks.
The disconnect highlights Nvidia’s unique position. Its stock has been one of the best-performing names — up nearly 1,300% in the past five years — thanks to the AI boom. But its rapid rise and ongoing risks tied to geopolitics and supply chains have made some investors hesitant to load up.
History shows that underowned stocks often get pulled higher over time as investors gradually increase their holdings to match the stock’s weight in the index.
“There is a statistically significant relationship between low active ownership … and future stock performance,” Morgan Stanley wrote.
By comparison, Microsoft (MSFT), Apple (AAPL), and Amazon (AMZN) are also underowned, but not to Nvidia’s extent. Microsoft was underweight by 2.39%, Apple by 1.66%, and Amazon by 1.40%.
In contrast, the most overowned tech stocks include Intuit (INTU) at +0.83%, Oracle (ORCL) at +0.32%, and Dell (DELL) at +0.25%.
Despite the underweighting, Nvidia’s fundamentals remain solid.
“Leading indicators of compute demand remain exceptionally strong with no signs of slowing,” the firm’s analysts wrote. “As supply chain constraints around rack-scale solutions ease and the U.S. government advances export license approvals for China, we continue to view Nvidia as a premier asset in the current era of AI dominance.”
Nvidia’s stock has been up 33% in 2025, outperforming the S&P 500’s 10% advance. Much of the optimism stems from demand for its graphics processing units (GPUs), used for AI and cloud-based enterprise applications.
Still, not everyone is on board with the bullish sentiment surrounding megacap stocks.
Torsten Sløk, Apollo Management’s chief economist, previously told Yahoo Finance’s Opening Bid that the current valuations in megacap tech stocks, and the index as a whole, may not be sustainable. (Disclosure: Yahoo Finance is owned by Apollo Global Management.) At the time, he pointed to internal data showing that the price-to-earnings (P/E) ratios of the 10 largest S&P 500 companies, including AI stocks like Meta (META) and Nvidia, had surpassed levels seen during the dot-com bubble in 1999.
