LIVE MARKETS-AI is hot, but Wall Street’s cold on Nvidia

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AI IS HOT, BUT WALL STREET’S COLD ON NVIDIA
Nvidia NVDA.O, despite its commanding position in the AI space, is the most under-owned mega-cap tech stock among institutional investors, revealing a striking anomaly, according to a Morgan Stanley analysis for the second quarter of 2025.

In Q2 2025, big investors owned much less Nvidia stock than expected, falling 0.92% short of its S&P 500 .SPX weight. That’s the biggest gap in 16 years, except for Microsoft MSFT.O in Q2 2024, as per Morgan Stanley estimates.

Nvidia has gained 35.5% so far this year, while Microsoft has risen 22.6%.

"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," says Erik Woodring, equity analyst at Morgan Stanley in a note dated 19 August, 2025.

Tech giants like Microsoft, Apple AAPL.O, Amazon AMZN.O, Alphabet GOOGL.O, Broadcom AVGO.O, and Meta META.O are also under-owned relative to their index weights.

Meanwhile, Intuit INTU.O, Oracle ORCL.N, and Dell DELL.N stand out as the most over-owned tech names tracked by the brokerage.

Stocks that are under-owned compared to their S&P 500 weight often see a “technical pull higher” as investors rebalance, Morgan Stanley’s data shows this trend is statistically strong, even after adjusting for size and earnings.

This dynamic could serve as a powerful catalyst for tech’s next leg higher. With AI, cloud computing, and digital transformation continuing to drive growth, the combination of industry innovation and technical rebalancing may fuel renewed momentum in the sector’s titans.

For investors, this under-ownership trend isn’t just a curiosity; it’s a signal. As Wall Street plays catch-up, the leaders of the digital age may be poised for a fresh wave of upside, driven not only by breakthroughs but by the sheer force of institutional repositioning.

(Akriti Shah)

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