NVDA, MSFT, AAPL, AMZN: Why Fund Managers Are Trimming Holdings in Mega-Cap Tech Stocks
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These companies account for a large share of the S&P 500 (SPX) index, yet active fund managers hold fewer of them than their benchmark weightings. The under-ownership of mega-cap tech stocks grew to roughly 140 basis points in the second quarter, compared with 115 in the first quarter.
Notably, mega-cap companies are those with a market capitalization of $200 billion or more. Most of these companies boast well-established business models, strong brand power, and global operations.
Nvidia Leads the Gap
Nvidia, now the world's most valuable company, saw the gap between its institutional ownership and S&P 500 weighting widen by 92 basis points in the quarter, reaching -2.41%, the largest underweight among big tech stocks.
This comes even as Nvidia's stock has skyrocketed nearly 1,346% over the past five years, powered by surging demand for its AI GPUs. In 2025 alone, shares have jumped 30.8%, far outpacing the S&P 500's 9.65% gain.
Nvidia leads the gap, but others are not far behind. Microsoft, Apple, and Amazon are also underweight in institutional portfolios by 2.39%, 1.66%, and 1.40%, respectively. Still, these stocks have all delivered strong long-term gains, with Microsoft up 137%, Apple up 95%, and Amazon up 38% over the past five years.
Why Funds Are Holding Back
Morgan Stanley analyst Erik Woodring said that mega-cap tech stocks now make up such a large share of the S&P 500 that active managers are cutting exposure to avoid concentration risks. Some managers are also cautious for company-specific reasons. For instance, Apple has been hit by slower iPhone sales and ongoing regulatory challenges.
Still, Woodring believes that this under-ownership could be a bullish signal. If fund managers raise their holdings to match index levels, it could trigger another wave of buying, pushing mega-cap tech stocks to fresh record highs.
Which Mega-Cap Stock Looks Most Attractive?
Using TipRanks' Stock Comparison Tool, we compared NVDA, AMZN, AAPL, and MSFT to see which stocks analysts favor most. Nvidia, Amazon, and Microsoft all carry Strong Buy ratings, with analysts projecting more than 10% upside for each. Apple, on the other hand, holds a Moderate Buy rating, with a more limited upside of about 3.7% from current levels.
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