UBS Group AG Q2 bets on funds continue to hold tech giants! Microsoft remains the top heavy stock

According to the disclosure from the U.S. Securities and Exchange Commission (SEC) obtained by Zhitong Finance APP, UBS, the leading international wealth management leader headquartered in Switzerland, released its second-quarter U.S. stock holding report (13F) as of June 30, 2024.

The latest statistics show that UBS's total market value of holdings in the second quarter was approximately $405 billion, compared to around $402 billion in the previous quarter, with a slight increase in market value quarter-on-quarter driven by the continuous rise in the stock prices of tech giants. In the second quarter of this year, this wealth management giant added 1,259 individual stocks to its U.S. stock investment portfolio, increased holdings in 3,729 individual stocks, reduced holdings in as many as 4,156 individual stocks, and cleared out 1,045 individual stocks. The top ten holdings accounted for 17.59% of UBS's total market value of U.S. stock holdings.

Among the top ten heavy-weight stocks held by UBS in the second quarter, they are concentrated in U.S. tech giants, all of which UBS significantly increased their positions in, with some stocks seeing an increase of up to 10%. However, apart from the tech giants, most other stocks in UBS's entire portfolio were reduced, indicating that UBS is betting that global funds will continue to benefit from the AI investment boom and the fundamentally strong U.S. tech giants. Microsoft (MSFT.US) firmly holds the top position, with approximately 31.92 million shares, a holding value of around $14.3 billion, accounting for 3.20% of the investment portfolio, an 8.43% increase in overall holdings compared to the previous quarter. Relying on its status as a major shareholder of OpenAI, Microsoft has embedded OpenAI's proud GPT-4 AI model into its flagship applications such as the Office suite and the Microsoft Azure cloud platform, becoming the absolute leader in AI applications globally. Its performance and stock price have been continuously growing since 2023, once firmly holding the title of "the world's most valuable listed company," but its recent stock price has weakened following the global tech stock downturn trend.

Apple (AAPL.US) ranks second, with approximately 56.41 million shares, a holding value of around $11.9 billion, accounting for 2.67% of the investment portfolio, an 11.45% increase in the number of shares held compared to the previous quarter. Since the release of the new intelligent smartphone AI feature Apple Intelligence in June, Apple's stock price has been on the rise. Compared to other tech giants like Google, Apple may have a cost advantage brought by self-developed AI chips. Whether in consumer electronics products such as smartphones or cloud server chips, the company does not need to spend billions of dollars on third-party AI GPU hardware, such as NVIDIA and AMD AI GPUs. Currently, Apple's total market value is as high as $3.4 trillion, reclaiming the top spot in the global market value rankings, and its stock price has outperformed the S&P 500 index so far this year AI chip leader NVIDIA (NVDA.US) ranks third, with UBS holding approximately 91.83 million shares in the second quarter, with a holding market value of approximately USD 11.3 billion, accounting for 2.55% of the investment portfolio, an increase of 13.75% in overall holdings from the previous quarter. Undeniably, NVIDIA, which has been a big winner in AI investment frenzy since 2023, remains the most favored AI investment target for Wall Street investment institutions. BlackRock, Vanguard, and Bank of America have all significantly increased their holdings in NVIDIA in the second quarter, with UBS also joining the ranks. NVIDIA holds a 90% market share in the data center AI chip market, almost a monopoly position. Although the recent stock price has fallen sharply due to the unclear prospects of AI monetization and expectations of a U.S. recession, the stock has still risen by 138% this year. Many institutions still believe that the current pullback is a great opportunity to buy NVIDIA at a low.

Amazon (AMZN.US) ranks fourth, with approximately 35.06 million shares, a holding market value of about USD 6.8 billion, accounting for 1.52% of the investment portfolio, an increase of 11.86% in holdings from the previous quarter. Amazon, favored by funds for its global market share of over 30% and its leading position in the global IaaS+SaaS cloud computing platform AWS, has long been a preferred investment target in the internet sector for many Wall Street institutions. However, Amazon's stock price has recently been hit hard due to the unclear prospects of AI monetization. The substantial spending by Amazon in AI infrastructure this year has raised concerns among investors about profit margin reduction, causing the stock to slightly underperform the S&P 500 index this year.

Google (GOOGL.US) ranks fifth, with approximately 27.25 million shares, a holding market value of about USD 5 billion, accounting for 1.12% of the investment portfolio, an 8.10% increase in holdings compared to the previous quarter. Since 2023, Google has been almost on par with OpenAI as the absolute leader in the generative AI field. With its Gemini large model continuously integrated into various edge applications and developers leveraging Google Cloud to develop AI applications, Google has been favored by many Wall Street institutions in the past year. The stock has outperformed the S&P 500 index this year. However, Google's stock price has also been hit hard recently due to the unclear prospects of AI monetization and the pressure from U.S. regulatory agencies to split its business.

Among the top ten major holdings, UBS's sixth to tenth largest holdings are: UBS Group AG (UBS.US), Russell 2000 Index ETF Put Options (IWM.US,PUT), S&P 500 Index ETF Put Options (SPY.US,PUT), Broadcom (AVGO.US), and S&P 500 Index ETF (SPY.US). In these holdings, except for the reduction in holdings of S&P 500 Index ETF Put Options and S&P 500 Index ETF, UBS increased its holdings in the second quarter in the others.

• Selling put options means UBS expects the S&P 500 ETF price not to drop significantly, or even to stay above a certain level. By receiving the option premium, profits can be made when the index remains stable or rises. However, if the S&P 500 index drops significantly, selling put options will incur losses.

• In addition, UBS significantly increased its holdings of Nasdaq 100 ETF put options in the second quarter, with the increase reaching as high as 29%, rising to the eleventh largest holding target for UBS. This also indicates that while UBS is bullish on the performance of tech giants like Nvidia and Microsoft, it is not optimistic about the overall trend of tech stocks in the short term, betting that global funds will continue to flock to tech giants like Nvidia. The Nasdaq 100 index covers many popular tech stocks and is considered a global tech stock barometer. By increasing put option positions, institutions can hedge losses in a market downturn, which is a common risk management strategy used to protect portfolios from the impact of a significant drop in a particular holding.

• In terms of changes in holdings, the top five buying targets are: Nvidia, Apple, Microsoft, Google, and Nasdaq 100 ETF (QQQ.US). The top five selling targets are: S&P 500 ETF put options, 20-year and longer-term US Treasury bond ETF (TLT.US), Pioneer Natural Resources call options (PXD.US, CALL), Russell 2000 ETF call options (IWM.US, CALL), and Nasdaq 100 ETF call options.