When regular investors dip their toes into the stock market, the waves they make are barely a ripple in the vast financial ocean. But lurking beneath the surface are colossal entities – institutional investors. With pockets as deep as the Mariana Trench, these giants can cause seismic shifts in a stock’s trajectory.
The “big money” players, including investment behemoths, insurers, and pension funds, hold the reins on a significant chunk of the so-called “Magnificent Seven” stocks. Given the epic proportions of their investments, it’s no surprise.
Delving into the realm of these elite stocks, one cannot ignore the gravitational pull exerted by institutional investors on these sacred seven. Which among these titans are the current apple of the “big money’s” eye?
The Vanguard of Victors
Institutional investors have firmly anchored themselves in Nvidia‘s (NASDAQ: NVDA) universe, claiming ownership of approximately 65.5% of its shares. This chipmaker has emerged as the darling of the bigwigs, drawing in more institutional investments than any other member of the Magnificent Seven.
Recent data from Nasdaq highlights a flurry of activity surrounding Nvidia. A staggering 2,202 institutional holders ramped up their positions in the company, while 1,540 scaled back. Despite 112 investors bidding adieu to Nvidia, 436 new stalwarts entered the fray.
Following closely behind Nvidia is Amazon (NASDAQ: AMZN). Nasdaq reports a surge in institutional interest with 2,545 investors expanding their holdings, juxtaposed against 1,852 reducing theirs. Another 440 initiated fresh stakes in the Amazonian empire, with 119 making a clean break.
The allure of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has not gone unnoticed. Institutional investors are flocking to this tech giant, with 3,877 increasing their positions. Meanwhile, 3,514 decided to downsize. A noteworthy 758 jumped onboard, while 201 disembarked from the Alphabet journey.
Following the trail of the big money leads us to Nvidia, Amazon, and Alphabet. The driving force behind this capital influx? The explosive growth in generative artificial intelligence (AI). It’s akin to witnessing a renaissance—the insatiable hunger for AI prowess propels Nvidia’s GPUs to the zenith, while Amazon and Alphabet provide cloud terrains for the deployment of AI applications, with Alphabet boasting the formidable language titan, Gemini.
In the Heart of the Herd
Two Magnificent Seven stocks hold their ground amidst a flurry of institutional interest. Meta Platforms (NASDAQ: META) and Tesla (NASDAQ: TSLA), while not enjoying the limelight of Nvidia, Amazon, and Alphabet, have still garnered substantial attention from institutional players.
Recent Nasdaq data reveals a wave of bullish sentiment towards Meta, with 1,951 institutions upping their stakes, compared to 1,503 pulling back. In the Tesla sphere, 1,627 institutional investors expanded their positions, overshadowing the 1,243 that retrenched. Additionally, 336 institutions took a leap of faith by initiating new Tesla positions.
The Tail End Contenders
Bringing up the rear are Microsoft (NASDAQ: MSFT) and Apple (NASDAQ: AAPL). Microsoft saw a mere whisker of a difference between institutional investors increasing and decreasing their positions, with 2,492 favoring growth and 2,431 opting for reduction. The Apple narrative, however, painted a grimmer picture, with 2,571 savvy investors scaling back, while 2,143 doubled down on their positions.
Despite the lukewarm reception from institutional juggernauts, there’s a glimmer of hope for these tech titans. Microsoft spurred 422 new positions, overshadowing the 99 that said their goodbyes. Similarly, Apple witnessed a surge in new positions to sold-out positions ratio, with 396 new bets compared to 77 exits.
Should You Swim with the Whales?
Taking a dip in the same stocks favored by institutional investors might not be a bad idea. Their colossal investments can send stock prices soaring. But remember, the data on institutional buying and selling reflects past actions. Their sentiment could have soured on a previously lionized stock.
The journey ahead for the Magnificent Seven is not without challenges. Some face lofty valuations, notably Nvidia and Microsoft, while Apple and Tesla see growth tapering off amidst fierce competition. Nevertheless, the prospects for each of these illustrious stocks are robust. Even for a minnow investor, there’s potential to reel in a catch if you adopt a buy-and-hold strategy.
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John Mackey, former CEO of Whole Foods Market, a wing of Amazon, sits on The Motley Fool’s board of directors. Randi Zuckerberg, an ex-director of market development at Facebook and kin to Meta Platforms CEO Mark Zuckerberg, is also a member of The Motley Fool’s board of directors. Meanwhile, Suzanne Frey, an executive at Alphabet, is part of The Motley Fool’s board of directors. Keith Speights holds pieces of Alphabet, Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla, advocating for certain options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool follows a transparent disclosure policy.
The author’s views and opinions do not necessarily align with those of Nasdaq, Inc.
