Broadcom's Semiconductor Stock Ownership Climbs Rapidly Among Active Fund Managers

BofA Equity Strategy data reveals Nvidia as the most-owned chip stock by active funds, with a significant rise in Broadcom's ownership to 45.8% from 28.7% in a year. Broadcom surpassed other semiconductor names in popularity, experiencing the largest quarter-over-quarter growth. Conversely, Intel and ON Semiconductor saw declines in fund ownership. Despite Nvidia's prominence, its relative weighting in funds remained low compared to its market index weighting, suggesting a potential undervaluation in funds' portfolios.

In a recent shift in the semiconductor industry, data from Bank of America (BofA) Equity Strategy reveals that Broadcom Inc. (AVGO) has surpassed both Intel Corp. (INTC) and Nvidia Corp. (NVDA) as the most-owned chip stock among active funds [1]. This surge in popularity is noteworthy, considering Broadcom's relatively low weighting in funds compared to its market index weighting [1].

According to the BofA report, Broadcom's stock was owned by 45.8% of active fund managers in June, up from 28.7% in the same period last year [1]. This growth in ownership places Broadcom in the second spot, ahead of Applied Materials Inc. (AMAT) and Advanced Micro Devices Inc. (AMD) [1].

While Nvidia still holds the title of the most-loved semiconductor stock among active managers, its relative weighting in funds has decreased significantly, from 1.08x in June 2023 to 0.99x in June 2024 [1]. This discrepancy suggests that funds may be underestimating Nvidia's potential and could be missing out on potential gains.

In contrast, Broadcom and Applied Materials have seen the largest quarter-over-quarter expansion in ownership, with Broadcom's rising to 45.8% from 41.7% and Applied Materials' increasing to 39.5% from 36.1% [1].

However, Broadcom's higher relative weighting of 1.68x in funds must be taken with a grain of salt when considering its largest shareholder, who brings the number down to 0.58x [1]. Nevertheless, this trend highlights the growing confidence active funds have in Broadcom's future prospects.

Meanwhile, some semiconductor stocks have experienced a decline in fund ownership. ON Semiconductor Corp. (ON), Analog Devices Inc. (ADI), and Intel Corp. (INTC) all saw their ownership percentages fall the most sequentially from the end of the first quarter [1].

In conclusion, the BofA Equity Strategy data reveals an interesting shift in the semiconductor industry, with Broadcom emerging as the most-owned chip stock among active funds. This growth in popularity is noteworthy, considering Broadcom's relatively low weighting in funds compared to its market index weighting. Active funds appear to be increasingly confident in Broadcom's future prospects, while Nvidia and Intel may be experiencing a decline in favor.

References:
[1] Emily Bary, "Nvidia is most-owned chip stock in active funds, but another is moving up fast," MarketWatch, July 2, 2024, https://www.marketwatch.com/news/articles/nvidia-is-most-owned-chip-stock-in-active-funds-but-another-is-moving-up-fast-2024-07-02.