Big investors still aren’t too excited about Nvidia Corp., even though the company gets a lot of love on Wall Street.
Vivek Arya, an analyst at BofA Global Research, and his team recently did their quarterly look at how many active managers own chip stocks. It discovered that even though Nvidia NVDA 3.37% is the most-owned chip stock, it’s still “relatively underweight.”
Since Nvidia has been getting a lot of attention lately, it might look like fund managers are really into the stock. In fact, some may need to cut back on their holdings as the price rises, which is risky for the stock. In contrast, there are a lot of other big tech names that have more money in funds than their weightings in the S&P 500 SPX -0.17%.
The experts at BofA said that Nvidia’s relative weighting is 0.99x, which is “well below” the top-16-owned peers in the IT and communication services sectors. Nvidia, on the other hand, could grow sales more than five times faster.
When BofA last looked at who owned which semiconductors, three months ago, they found that Nvidia had a 1.04x relative weight as of the end of June. Since then, that weight has gone down.
Companies that are worth more than Nvidia are Meta Platforms Inc. (META) (1.74%), Salesforce Inc. (CRM) (0.51%), Microsoft Corp. (MSFT) (-0.14%), and Alphabet Inc. (GOOG) (-0.06%). GOOGL 0% Fewer shares of Applied Materials Inc. (AMAT -0.78%), KLA Corp. (KLAC -0.36%), and Micron Technology Inc. (MU 1.97%) are likely to go up in value in the electronics market. The analysts wrote that the chip stocks that are bought the most are relatively underweight. Broadcom Inc. AVGO 0.72% is one example. On paper, Broadcom has a relative weighting of 1.54x, but when its biggest backer is taken out of the picture, that relative weighting drops to just 0.7x.
By far, the most owned semiconductor names are still Nvidia and Broadcom, based on the amount of funds that own those names. Broadcom has 52% of the company, Nvidia has about 70%, and Advanced Micro Devices Inc. AMD 1.92% has close to 39%.
The research was done by the BofA team earlier this week. Shares of Nvidia barely managed a small gain on Monday. They then fell 3.7% on Tuesday, but they got back on track in the next two sessions. At the end of Thursday’s business day, the stock was up 2.8%. On Wednesday, it had gone up 1.6%.
