Microsoft has emerged as a significant player in the stock market, with Morgan Stanley's research highlighting its status as the most under-owned megacap stock among institutional investors. This discovery suggests that a potential rebound might be on the horizon. The Wall Street firm conducted an in-depth analysis by looking at new regulatory filings from the 15 largest tech companies in its coverage and determining each firm's average weighting within the top 100 actively managed institutional portfolios.

Uncover the Hidden Potential of Microsoft's Stock

Microsoft's Weighting Discrepancy

Morgan Stanley's findings indicate that stocks often experience a technical pull higher when active ownership is much lower than their weightings in the S&P 500. In the case of Microsoft, the gap between its S&P 500 weighting and institutional ownership stood at 2.08% by the end of the third quarter, making it the most under-owned Big Tech name. This significant disparity has drawn attention and sparked discussions among investors. Despite this, Microsoft's shares have underperformed the broader market significantly this year, with a gain of about 10% compared to the S&P 500's nearly 24% advance in 2024. The company's recent forecast of slower growth than expected, along with delays in data center infrastructure deliveries from outside suppliers, has hindered its performance. These factors have prevented Microsoft from meeting demand in the fiscal second quarter.

Apple's Under-Ownership Status

After Microsoft, Apple takes the second spot as the most under-owned megacap tech stock coming out of the third quarter. Similar to Microsoft, Apple has also lagged the broader market this year, with a gain of 18%. The iPhone maker's performance has been a topic of interest among investors, as they await signs of a potential turnaround. The reasons for Apple's under-ownership and lagging performance may vary, but it remains a significant consideration for those analyzing the tech sector.

Intuit's Over-Ownership and Potential Downturn

On the flip side, Intuit, the software company that makes TurboTax tax filing software, emerged as the most over-owned tech stock at the end of September. According to Morgan Stanley, this could lead to a technical downward pull in the near future. Intuit's shares fell more than 5% on Tuesday following a report suggesting that President-elect Donald Trump's government efficiency team is considering creating a free tax filing app. This news had a significant impact on the company's stock price, and it is now up just 3% in 2024. Investors will be closely watching Intuit's performance in the coming months to see how it navigates this challenging situation.

Adobe's Institutional Embrace and Recent Setbacks

Adobe is another tech name that has been closely watched by institutions. However, the company's shares took a beating in September after it released fourth-quarter guidance that fell short of expectations. As a result, the stock is down nearly 17% this year. This setback has raised questions about Adobe's future performance and its ability to meet the expectations of institutional investors. Despite the challenges, Adobe remains an important player in the tech industry, and investors will be closely monitoring its developments.