FAANG Stocks: Definition and Companies Involved

In addition to being widely known among consumers, the five FAANG stocks are among the largest companies in the world, with a combined market capitalization of around $7 trillion as of Q1 2022. Morningstar has a “buy” rating and $320 fair value for Microsoft shares, and other Wall Street analysts agree that long-term investors should be buying the 2022 dip. The 40 analysts that cover Microsoft have an average price target of $290, suggesting 25.2% upside potential.

Realizing he needed to make a major change, Zuckerberg refocused the company on cutting costs and bolstering its social media properties as well as its AI capabilities. Meta even launched a rival to Twitter – or X – which is called Threads. In addition, rising interest rates tend to trigger earnings contractions in the stock market as a https://www.forexbox.info/recommended-strategies-for-automated-trading-fx-to/ whole, compressing valuations. Meta Platforms currently ranks just outside of the top 20 largest stocks in the S&P 500 with a market cap of $263 billion. Analysts are optimistic Alphabet’s share price will find its stride once again. The average price target among the 44 analysts covering GOOGL stock is $129, suggesting 36.3% upside.

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  2. The average price target among the 43 analysts covering NFLX stock is $305, suggesting just 4.3% upside.
  3. The company continues to add features to its Bard chatbot and integrate its generative AI technologies across its other  apps.
  4. When Cramer first coined the term FANG back in 2013, Facebook’s market cap was just $65 billion and the company was less than a year removed from its initial public offering (IPO) in May 2012.

In 2015, the company announced it would be rebranding as Alphabet. Part of the decision for the name change was to highlight all of the company’s other businesses outside of Google Search, such as Gmail, YouTube, Google Nest and Google Cloud. Today, Apple is still heavily reliant on iPhone revenue, which accounted for 47.2% of Apple’s total revenue in the most recent quarter. However, Apple’s Services revenue has grown to 21.2% of its total revenue, and many Wall Street analysts see Services sales as more consistent and higher quality than hardware sales.

Why are FAANG stocks so popular?

Alphabet is a tech conglomerate primarily split between Google and its “other bets” segment. Although Google started as an internet search company, it’s continued acquiring and developing consumer-facing products — nine boasting more than 1 billion users each. Google also encompasses a growing cloud computing business and a relatively small hardware business.

That’s especially true now that most discount brokers charge no commissions and allow fractional share purchases. The company also operates a gaming segment led by Xbox and Activision Blizzard and an advertising business across its search engine, web portal, and LinkedIn social network. Additionally, it has a relatively small consumer device segment.

It makes money by displaying ads to users while they browse photo and video feeds. Meta is investing heavily in virtual reality (VR) technology, led by its Quest headset. The main attraction of buying FAANG stocks is their immense growth potential and their dominance in their respective markets.

Are FAANG Stocks Hard to Acquire?

Because of the heavy weighting of FAANG stocks in indexes such as the S&P 500, it’s worthwhile for investors to learn a bit more about them. Over the past decade, FAANG stocks have produced returns that are much higher than the benchmark indices, including S&P-500 and the tech-heavy NASDAQ-100. That extraordinary power of FAANG stocks means that you are better off by buying some of the top FAANG names to improve your returns. The COVID-19 pandemic https://www.day-trading.info/best-stock-trading-apps-of-2021/ has provided the recent manifestation of the leadership of the FAANG when these companies fueled the S&P 500’s fastest recovery from a bear market in decades. Of course, consumers are familiar with Apple and Alphabet for their phones and search service, respectively. These growth records are built on each company’s expanding global empire, though sometimes people don’t realize the companies have other businesses under the corporate umbrella.

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Since the S&P 500 is a broad representation of the market, the movement of the market mirrors the index’s movement. As of August 2021, the FAANGs make up about 19% of the S&P 500—a staggering figure considering the S&P 500 is generally viewed as a proxy for the United States economy as a whole. Their substantial growth has been buoyed recently by high-profile purchases made by large and influential investors such as Berkshire Hathaway (BRK), Soros Fund Management, and Renaissance Technologies. These are just a few of the many large investors who have added FAANG stocks to their portfolios because of their perceived strength, growth, or momentum. With such a small index, investors may be better off building their own portfolio of FAANG or MAMAA stocks and avoiding the ETN expenses.

In the meantime, Alphabet’s core advertising business is on the mend. Since its founding in the late 1990s, Alphabet has mostly made the right bets, whether that was on Android or YouTube. But during the past year, the company has been caught flat-footed. The explosive growth of OpenAI’s ChatGPT – which is backed by rival Microsoft (MSFT) – has shown that Alphabet blundered with generative AI. The irony is that its researchers helped to pioneer this technology, such as with the creation of the transformer model. Wayne Duggan has a decade of experience covering breaking market news and providing analysis and commentary related to popular stocks.

News & World Report and a regular contributor for Forbes Advisor and USA Today. Big tech stocks have taken a hit in 2022, and each of the MAMAA stocks is down at least 13% year-to-date. Tech stocks have been among the top-performing investments over the past two decades, but the tech rally has hit a wall in 2022. If all of those are good, I’d say [big tech stocks] are on sale,” she says. The FAANG stocks grew rapidly during the mid- to late 2010s, becoming increasingly influential over the stock market. Each of the FAANG stocks trades on the Nasdaq exchange and is included in the S&P 500 Index.

Bottom line on investing in FAANG or MAMAA stocks

Facebook benefited immensely during the COVID-19 pandemic as the number of businesses that use social media to reach their customers increased exponentially. To help sustain that momentum, Facebook has been investing in new technologies, such as the metaverse, to fuel future growth. “With Facebook now Meta and penny stocks top picks and gains newsletter Google now Alphabet, that means our new acronym is MAANAM. Yet, not quite as sexy, but the returns sure could be.” Apple’s market cap has grown to $2.4 trillion, but analysts still see more growth ahead. The average price target among the 37 analysts covering AAPL stock is $180, suggesting 17.9% upside.

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