Big tech stocks such as Microsoft are ‘underowned.’ Morgan Stanley says that’s a good thing

Big tech names such as Microsoft , Apple and Amazon aren’t getting enough love from active portfolio managers. But that could be a good thing for their stocks and investors going forward, according to Morgan Stanley. “The 2Q ownership data leaves us incrementally more positive on the leading tech platforms; MSFT, AAPL, AMZN and GOOGL & META , given these stocks continue to be underowned vs. their weighting in the S & P 500,” wrote analyst Erik Woodring in a note to clients Tuesday. Technology stocks have slumped this year as investors steer clear of growth areas in the face of rising inflation and higher interest rates. That’s pushed the tech-heavy Nasdaq Composite and the S & P 500’s information technology sector about 24% and 27% off their 52-week highs, respectively. An evaluation of recent 13F data from Morgan Stanley seems to support that trend, showing that active managers own less of big tech shares when compared to their S & P 500 weightings. However, the bank said this could end up being a positive going forward. “A quant analysis on this historical data shows that on average, after adjusting for market cap and earnings beats, there is a statistically significant relationship between low active ownership relative to the S & P 500 and future stock performance,” Woodring wrote. “This indicates that on average, stocks appear to experience a technical pull higher when active ownership is much lower than the market, and vice versa.” Microsoft was the most underowned of the large-cap technology stocks followed by Apple, Nvidia , Amazon and Alphabet, the data suggests. On the flip side, Intuit reigned as the most heavily owned stock, with its weighting versus the S & P 500 up from last quarter and its historical levels. At the end of the second quarter, the spread between big tech ownership among actively managed portfolios versus the their S & P 500 weightings reached negative 69 basis points. However, that gap fell behind the rest of tech and their S & P 500 weightings on average, the bank found. Although Apple’s spread decreased in the recent quarter, it still boasted the widest gap after Microsoft among big tech stocks. “For reference, the gap between Apple’s institutional ownership and its S & P 500 weighting over the last 3 years has been 101bps on averages vs.125bps currently,” Woodring wrote. “We believe this largely reflects investor concerns regarding deteriorating consumer electronics demand.” Shares of the iPhone maker have slumped about 11% this year and more than 13% from their highs. — CNBC’s Michael Bloom contributed reporting

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