FAANG stocks are some of the most significant technology stocks worldwide, consisting of Meta Platforms Inc. (NASDAQ: FB), formerly called Facebook, Amazon.com Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), Netflix Inc. (NASDAQ: NFLX) and Google, now called Alphabet Inc. (NASDAQ: GOOGL). Moreover, the companies are the most dominant firms in their fields with substantial market capitalizations.
The demand for technology and the constant push for technological advances have been huge due in no small part to the players in the FAANG acronym. The companies have grown at rapid rates and have accrued a considerable number of customers over the years.
What Are FAANG Stocks?
FAANG stocks — a name coined in 2013 by Jim Cramer, television host of CNBC’s Mad Money — are extremely valuable and have had a significant impact on investors' portfolios. The name had initially been FANG, but in 2017 Apple was added to the acronym for the second A. Their share prices are said to be justifiable because of their exceptional financial and operational performances over the years.
Investing in FAANG Stocks
All the stocks in the acronym operate as tech stocks but provide various products and services through numerous areas of the technology market. Investing in these companies provide investors with exposure to markets such as smartphones, streaming, the metaverse and social media.
Facebook or Meta Platforms
Meta Platforms, formerly known as Facebook, is the most popular social media platform in the world, with 2.6 billion monthly active users. The company was founded in 2004 by Mark Zuckerberg and has built a market cap of $834 billion. Along the way, the company has acquired companies such as Instagram, Whatsapp, Oculus and many more.
The company has significant investments for the future. As its new name suggests, it is looking to expand its services into the metaverse and continue paving the way for further innovation and new products. In recent times, the company's image has suffered from allegations and whistleblower comments, harming Meta’s shares.
Apple is one of the most well-known companies on the planet. The majority of people with some sort of tech gadget own an Apple product such as an iPhone, Apple Watch or Macbook. Apple is an innovator and constantly pushes boundaries when it comes to product development and creation.
Apple has been looking to expand into the car industry and more suitably, into fully autonomous cars. It plans to launch its product by 2025, with the vehicle having no steering wheel or pedals. Whether the autonomous vehicle will be successful is another question, but the company has the ability and funds to build the tech of the future.
Amazon is one of the most considerable forces among the FAANG stocks, with a huge presence in the e-commerce market, supplying numerous products to its 310 million active accounts. In addition, revenue reached $386 billion in 2020, with help from the pandemic increasing online orders across the market. Therefore, it's difficult to argue against the company’s market capitalization.
The company has built numerous products in addition to its online services, such as Amazon Prime memberships, AmazonFresh, Alexa and many other brands. As a result, other tech stocks have similar outlooks, looking to expand their services and lead the way to remain on top.
Netflix can be seen as an outcast compared to the other stocks in this acronym. The company is a streaming service that offers a vast library of films and shows through deals and its own production companies. Consumers pay a monthly fee to access all the shows, with no advertisements in return.
The company’s growth has been enormous, especially because of restrictions keeping individuals inside. Netflix has been facing fierce competition in its market as the success of the streaming market has become clear. Competition from new stocks such as Hulu, Disney+ and Apple TV+ could be the potential reason why shares for Netflix have decreased.
Finally, Google, founded in 1998 by Larry Page and Sergey Brin, is a massive tech company that has been a tool everyone consistently uses on a day-to-day basis. The company started out as a search engine to scour the internet and assist consumers' needs. Since its inception, the company has expanded to become much more, with products such as the Google Phone, Android TV and YouTube.
What Are MAMAA Stocks?
After FAANG, came another acronym, MAMAA. After a change in name for Facebook to Meta and the introduction of Microsoft, Jim Cramer decided it was time to change. The new acronym resulted in Microsoft taking Netflix’s place. At the time, Microsoft had surpassed Apple as the world’s most valuable company.
Meta: Facebook changed its name to Meta, coming as a huge surprise to many. The company wanted to deviate from just one product, and Zuckerberg stated it was a better representation of the company. The move also suggests that Meta is all in on the metaverse. Jim Cramer praised Meta’s vision for the new digital world.
Apple: Apple kept its place on the list as the long-term growth for the company is rarely argued against. Despite a slight fall in its share price over the last month, earnings are expected to be profitable and the company is looking to have iPhones offer alternative payment systems, further solidifying Apple in the tech market.
Microsoft: Microsoft was the company to take Netflix’s position in the acronym. The company became the most valuable company globally on Oct. 29, 2021, surpassing Apple. However, a recent decline in Microsoft's share price has meant it lost its top spot.
Founded in 1975 by Bill Gates and Paul Allen, Microsoft built numerous brands in multiple markets, asserting its dominance among competitors. From hardware products such as its consoles and controllers to productivity services such as Excel, Word, Powerpoint and Microsoft Teams, Microsoft is a major player in this sector.
Amazon: Amazon has been unmoved from its position in the acronym, maintaining its brand as one of the most successful online stocks. The company’s stock has shown consistent growth over the last five years. However, the stock has seen a recent correction to its shares as many investors argue against an inflated market.
Alphabet: Google’s parent company Alphabet is the final letter in the acronym. The company was created after a restructuring of Google’s business in 2015 and became the parent company for numerous Google subsidiaries. It earns most of its revenue through advertising, essentially acting as an intermediary between consumers and merchants.
Compare Stock Brokers
FAANG companies are powerhouses in their respective fields and in the overall market. You can access the in-depth insights and reviews of these stocks in the table below.
Long-Term Power of Tech
Regardless of which acronym is considered, the businesses involved are still regarded as the biggest firms in the global market and are predicted to maintain their dominance for many years. Many individuals own at least one of the many items these companies offer, increasing demand for its stock from investors.
These firms offer excellent returns in the long run and have shown tremendous growth over the last few years. At the end of his show after introducing the new MAMAA acronym, Cramer told viewers, “Don't bet against MAMAA.”
Make sure to return to Benzinga for more stock market news.
Frequently Asked Questions
Is it good to invest in FAANG stocks?
If past growth were an indicator of the future, then FAANG stocks would be an excellent investment over the long term. Historically, these stocks have outperformed the S&P 500 index. However, despite impressive past performances, it is crucial to know that past performance does not always guarantee future success.
What are the new FAANG stocks?
Jim Cramer changed the acronym to make the new stocks MAMAA, which is short for Meta, Apple, Microsoft, Amazon and Alphabet.