Nvidia, a major AI stock, remains underowned by institutional investors, despite being the world’s most valuable company. Its 7.37% weight in the S&P 500 is not reflected in portfolios, with an adjusted underweight of 2.41%. Nvidia’s rapid growth and geopolitical risks have caused investor hesitation.

Morgan Stanley notes a significant relationship between low ownership and future stock performance, indicating potential for Nvidia to rise as investors adjust holdings. Microsoft, Apple, and Amazon are also underowned, but to a lesser extent. In contrast, Intuit, Oracle, and Dell are overowned in the tech sector.

Nvidia’s fundamentals remain strong, with high demand for its GPUs for AI and cloud applications. The stock has outperformed the S&P 500 in 2025, rising 33%. However, some, like Apollo Management’s chief economist, caution against the sustainability of current valuations in megacap tech stocks, citing high P/E ratios reminiscent of the dot-com bubble.

Read more at Yahoo Finance: Nvidia is the most underowned megacap stock, Morgan Stanley says