US Technology_ Large-Cap Institutional Ownership 4Q24_ Mega-Cap Tech Now The Most Under-Owned In 16+ Years

Summary of Key Points from the Conference Call Industry Overview - Industry: US Technology, specifically focusing on large-cap tech stocks - Context: The analysis is based on 4Q24 data, highlighting trends in institutional ownership among mega-cap tech stocks Core Insights - Under-Ownership of Mega-Cap Tech: Mega-cap tech stocks are now the most under-owned in over 16 years, with a gap of -124 basis points (bps) compared to the S&P 500 at the end of 4Q24, widening from -96 bps at the end of 3Q24 [1][2][12] - Apple (AAPL): Identified as the most under-owned mega-cap tech stock, with a -2.23% gap in institutional ownership compared to its S&P 500 weighting, which increased by 48 bps [2][9][15] - Amazon (AMZN): Experienced the largest increase in under-ownership, with a gap of -1.20%, widening by 66 bps from the previous quarter [2][9][18] - Microsoft (MSFT): Institutional ownership decreased by ~16 bps to 4.3%, remaining ~200 bps below its S&P 500 weighting [15][16] - Meta (META): Slightly over-owned with a weighting 16 bps above the S&P 500 [18] Investment Theses - Apple (AAPL): Expected to benefit from a multi-year product upgrade cycle driven by the large iPhone installed base (1.4 billion devices) and an extended replacement cycle of 4.8 years [15][16] - Microsoft (MSFT): Positioned well for the Generative AI innovation cycle, with expected mid-teens EPS CAGR through CY26, despite concerns over rising capital expenditures [15][16] - Meta (META): Anticipated to leverage its investments in Generative AI to enhance engagement and monetization, with a price target of $660, implying ~25$210, reflecting a ~15% upside, despite ongoing debates about its search and AI investments [18][82] - Amazon (AMZN): Identified as a top pick with a price target of 280, highlighting underappreciated GenAI opportunities in retail [18] Additional Observations - **Institutional Ownership Trends**: The average active ownership for large-cap tech stocks is significantly lower than their S&P 500 weightings, indicating potential for future stock performance improvements [12][39] - **Adobe (ADBE)**: Expected to see accelerated growth in Creative Cloud due to Generative AI, with a price target of 660 based on a 28x FY26e EPS multiple [65][66] - Salesforce (CRM): Continues to be a strong player in software, with a focus on digital transformation needs, trading at a discount to peers [22] - Intuit (INTU): Ownership levels remain high, but concerns about growth durability due to pricing strategies could impact future performance [22][23] Risks and Considerations - Market Sentiment: The current under-ownership of mega-cap tech stocks may indicate a potential rebound, but investor sentiment remains cautious due to macroeconomic factors [12][39] - Valuation Concerns: Some companies, like IBM, are facing challenges with high valuations amidst ongoing performance issues [35] This summary encapsulates the key insights and investment theses derived from the conference call, focusing on the trends in institutional ownership and the implications for major tech companies.