Institutional portfolios will continue to underperform due to a lack of adequate exposure to Nvidia and other winning technology names, UBS warned. Strategist Patrick Palfrey told clients that large-cap managers have 4.4% exposure to Nvidia, despite the artificial intelligence darling accounting for 6.6% of the S & P 500 . That is the biggest underweight position ever in Nvidia, according to Palfrey. Jensen Huang’s AI chipmaker is one of a handful of big tech names — including Microsoft , Amazon and Apple — that have smaller positions in these managers’ portfolios than they have in the S & P 500. Google parent Alphabet is a notable exception to this trend. That is costing investors, Palfrey said. In fact, the disproportionately small holding in Nvidia alone, on a relative basis, has already reduced the average institution’s performance by 1.3 percentage points so far in 2024, he said. What’s worse, there may be more pain to come as a result of underweighting Nvidia and other major tech stocks, the strategist said. Looking ahead, expectations for modest economic growth and sliding interest rates bode well for technology and other secular growth areas of the market. Earnings per share growth for megacap tech stocks should be stronger than other parts of the market in future quarters, he said. As a result, “a continued TECH+ underweight is likely to remain a headwind for many portfolios,” Palfrey wrote to clients. Concerns about how much further AI plays can run have weighed on Nvidia in recent months, with the chipmaker falling about 12% from its all-time high in June and little changed in the third quarter. But the first half was so strong for Nvidia that it is still ahead almost 150% in 2024. Nvidia has been a key driver of the broader market’s strength this year. The latest evidence came Tuesday as the S & P 500 hit a record high , boosted by a 4% rally in Nvidia as CEO Huang finished selling shares for the time being under a preset trading plan. NVDA YTD mountain Nvidia, year to date