What are FAANG Stocks? 5 Mega-Cap Tech Stocks
Know how long you want to hold your positions and your profit goals and loss limits for each stock. Given the influence of tech across industries and the recent string of IPOs, maybe there will be a new acronym in the near future. Each of the FAANG stocks trades on the Nasdaq exchange and is included in the S&P 500 Index.
- Our partners cannot pay us to guarantee favorable reviews of their products or services.
- In addition, on August 2, 2018, it became the first U.S. company with a market capitalization of over $1 trillion.
- The top five S&P 500 GICS tech stocks by market cap in 2022 are Apple, Microsoft, Nvidia (NVDA), Oracle (ORCL) and Broadcom (AVGO).
- It’s hard to talk about the general stock market without mentioning one or more FAANG stocks.
- Unfortunately, since then Meta’s revenue growth has stalled, including a 4.4% decline in revenue in the third quarter of 2022.
Unfortunately, since then Meta’s revenue growth has stalled, including a 4.4% decline in revenue in the third quarter of 2022. The company has also reported $9.4 billion in year-to-date losses for its metaverse segment. Regardless of whether you buy one of those ETFs or the FAANG or FAAMG stocks themselves, the first step is to open a brokerage account so you can easily buy and sell tech stocks online. However, the group has run into turbulence as rising inflation and rising interest rates have hit tech stocks especially hard. Big tech has changed a lot during the 2010s and 2020s, and the acronym for the biggest tech stocks has changed, too. Going beyond “What are the five FAANG stocks?” FAANG stocks operate in highly competitive market segments, meaning they must constantly stay innovative to retain market share.
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. Given Apple’s massive revenue base, it is difficult to find ways to boost growth. The smartphone market is also mature and the company has already benefited from much of the low-hanging fruit of its services business.
Alternatives to FAANG stocks
Investments may fall in value and an investor may lose some or all of their investment. Given the size of the five companies, purchasing stock in any of them can be expensive. High demand for stocks in tech majors means that investing in FAANG stocks is far from cheap. As always, investors need to do their homework and rely on hard data, not hunches. Look for stocks with strong sales and earnings growth and with charts forming proper bases under the right market conditions.
Buying individual stocks is always risky, especially in the tech sector. Be sure to limit your exposure to any particular stock or group of stocks if you want to build a diverse portfolio. On the other hand, those who believe in the fundamental strength of the FAANG stocks have abundant evidence for this claim. For example, Facebook is the world’s largest social network with approximately 2.8 billion users. In its 2021 annual report, Meta posted revenues of $118 billion and net income of $39.4 billion.
As components of most major stock indexes, you likely already have some exposure to FAANG stocks in your portfolio. Consider the following before increasing your concentration of these major blue-chip holdings. FAANG companies also have unprecedented access to personal data thanks to their social components and ubiquity. Companies like Alphabet and Meta Platforms have leveraged the power of data to gain deep insights into user behavior, preferences and trends.
The stocks referred to by the acronym are all well-known and richly-valued technology companies that trade on the Nasdaq exchange, a collection of approximately 5,000 American companies. Many other companies traded on the Nasdaq exchange are also considered growth fortfs investments, although very few have matched the impressive growth of the FANG stocks. Microsoftis the world’s largest software company and the parent company of the Windows operating system, LinkedIn professional social media platform and Xbox gaming brand.
Sign up for Investing Intel Newsletter
Increased investment in FAANG stocks stimulates liquidity in the market, facilitates business expansion and contributes to overall economic activity. 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. Meta owns two of the world’s largest and most engaging social media apps (Facebook and Instagram) and two of the biggest messaging apps (WhatsApp and Messenger). 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 term was coined by Jim Cramer, the television host of CNBC’s Mad Money, in 2013, who praised these companies for being “totally dominant in their markets”. Originally, the term FANG was used, with Apple—the second “A” in the acronym—added in 2017. You can diversify your investment by including multiple FAANG stocks into your portfolio.
These five companies have a whole host of products on offer for customers, keeping them coming back. These stellar performances, at such a challenging time for many other companies, has further added to their appeal. From smartphones and streaming to e-commerce https://traderoom.info/ and artificial intelligence. If you had put $10,000 into Netflix at the start of 2012, you’d have about 29 times that amount of money at the end of 2022 – a truly incredible return. And the annualized returns are about as good as you can find in the market.
Are FAANG (or MAMAA) stocks profitable?
The average price target among the 43 analysts covering NFLX stock is $305, suggesting just 4.3% upside. Since Cramer’s original FANG list in 2013, Netflix has expanded its business internationally and invested heavily in original content. It has recently focused on adding a lower-priced subscription tier that will be supported by advertising. Netflix will also reportedly be aggressively cracking down on password sharing in 2023.
Analyzing the Performance of FAANG Over Time
FAANG companies’ dominance in major US indices is likely to remain unchallenged for many years to come. Whether that’s a popular social media site, the latest iPhone, or access to new seasons of a beloved TV show. FAANG stocks have been among the most popular stocks in the market for a while and have delivered among the most tantalizing returns over the past decade. One of the ways to invest in FAANG stocks is to buy the individual company shares on the US stockmarket via online brokers such as TD Ameritrade in the US, or Hargreaves Lansdown in the UK.