- NVIDIA stock is underrepresented in investor portfolios compared to its market value.
- Nvidia holds 7.37% of the index’s value but only 4.2% in the average institutional portfolio.
- Morgan Stanley analysts report that Microsoft, Apple, and Amazon are also underowned, but less so than Nvidia.
- Recent agreements allow Nvidia and AMD to pay 15% of China AI chip sales revenues to the U.S. for license approvals.
- Nvidia stock rose 1.9% in the last month, supported by strong demand for AI-related technology.
Nvidia stock, despite recent significant performance, is less held by investors than expected for a company of its size, according to Morgan Stanley analysts. The analysts found that Nvidia is not a top choice among owners of large-cap technology stocks, even after becoming the world’s most valuable company.
Erik Woodring, a Morgan Stanley analyst, stated that Nvidia‘s market value makes up 7.37% of the relevant index, but it appears in only 4.2% of the average active institutional investment portfolio. This leaves the stock underweight by 2.41 percentage points—the largest gap among 15 major technology firms tracked by Morgan Stanley. Nvidia shares have increased nearly 1,300% over five years, largely due to growth in Artificial Intelligence sectors.
Woodring also noted that other major companies such as Microsoft, Apple, and Amazon are underowned relative to their index share, but to a lesser extent. For comparison, Microsoft’s underweight is at 2.39%, Apple’s at 1.66%, and Amazon’s at 1.40%. Companies like Intuit, Oracle, and Dell are held in portfolios above their index weight.
Recently, Nvidia and AMD agreed to pay 15% of their revenues from Chinese AI chip sales to the U.S. government. This arrangement enables them to maintain their export licenses and continue existing business operations in China. The announcement led to a 1.9% increase in Nvidia’s share price over the past month.
Morgan Stanley analysts observed that “leading indicators of compute demand remain exceptionally strong with no signs of slowing.” They added that as supply chain pressures ease and U.S. policy for export licenses to China becomes clearer, Nvidia is well positioned in the current market for Ai technology.
Also Read: China Stocks Surge to Decade-High Amid Market Optimism
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