Apple is now the Big Tech stock owned least by institutional investors and is the most underowned it has been since 2008, according to Morgan Stanley. Over the past four years, the most underowned megacap stock in institutional portfolios was Microsoft , according to analyst Erik Woodring. However, that position was ceded to the iPhone maker coming out of the second quarter. “Apple’s active institutional portfolio weighting in 2Q decreased 26 bps Q/Q to 5.51%. … However, Apple’s S & P 500 weighting increased 65 bps Q/Q to 7.72%, resulting in the spread between Apple’s S & P 500 weighting and active ownership increasing by 91 bps Q/Q, to 2.21%,” Woodring wrote in a research note Wednesday. AAPL YTD mountain Apple shares YTD “This is important as 1) 2Q marked the largest one quarter increase in Apple under-ownership in the history of our data, 2) today Apple is more under-owned than at any point since 2008, and 3) Apple has now surpassed MSFT as the most under-owned large cap tech stock,” Woodring said. Investors have been concerned Apple stock was overpriced after its huge rally earlier this year. The shares are higher nearly 40% in 2023 amid a broader rise in large-cap tech stocks tied to artificial intelligence that some traders expect could have gone too far, too fast. In fact, of the large-cap companies it evaluates, Apple, Microsoft, Nvidia , Amazon and Google parent Alphabet are the most underowned stocks in actively managed portfolios, according to Morgan Stanley. However, the analyst said there are bright spots for Apple around a recent boost in iPhone and services growth even amid concerns around its valuation. “While we know that Mac and iPad demand remains challenged, we are encouraged by the fact that September quarter growth is coming in the right places, with the iPhone inflecting to Y/Y growth, Services reaccelerating to low double digit growth in F4Q23/FY24, and gross margin tailwinds still underappreciated by investors,” Woodring wrote. “As a result, we see 5% upside to Street EPS estimates in FY24, and expect the stock to outperform as growth accelerates, margins expand Y/Y, and Consensus estimates move higher,” Woodring added. META YTD mountain Meta shares are up 145% since the start of the year. On the other hand, Meta was among the most overowned of large-cap tech stocks, and the most owned it has been in about 10 years, the analyst said. He said he remains overweight on the Facebook parent because of its focus on efficiency and improving monetization for Reels. “As a result, exiting the 2Q META was the most over-owned it’s been since 2014,” Woodring wrote. “Amongst the 5 mega-cap tech stocks, META is the only name where institutional ownership is greater than its S & P 500 weighting.” — CNBC’s Michael Bloom contributed to this report.
