In fact, although all of the FAANG stocks have healthy cash positions, only one of the FAANG stocks, Apple, currently pays a dividend. However, despite the challenges that face these companies, they each continue to dominate their respective industries in terms of market share. There is little reason to believe that any of these companies will suffer from a significant decline in revenue growth and all should continue to have positive, and significant, free cash flow. Yet a number of investors will make the very same case for all the other FAANG stocks, so let’s take a look at what the analysts believe will happen over the next 5 years, courtesy of TIKR.
There are several factors that make GOOG stock your best option, after the FAANG stock “defanging.” First off, valuation. Again, it’s not the cheapest FAANG stock, but it trades at a lower forward multiple than AMZN (forward multiple of 117.3x) and AAPL (21.5x forward multiple). NFLX is cheaper (with its 15.5x forward multiple), yet this multiple may be misleading. Given the gray area when it comes to content amortization, its current earnings could be inflated.
For example, Meta remains as dominant as ever with its social media assets. Facebook, Facebook Messenger, WhatsApp, and Instagram are consistently among the most-downloaded social apps worldwide. What’s more, Meta recognized 3.71 billion unique monthly active users across its family of apps during the third quarter.
Following the recent results, Deutsche Bank analyst Bryan Kraft upgraded Netflix stock to a Buy from Hold and increased the price target to $350 from $270. Sales from iPhone, the largest revenue contributor, grew almost 10% to $42.6 quantitative trading systems billion but lagged expectations. Also, Services sales of $19.2 billion rose 5% and fell short of estimates. It’s worth noting that Mac sales increased 25.4% to $11.5 billion, defying the broader industry trend of lower PC shipments.
However, by the end of 2021, each of these stocks came under pressure sparking a sell-off in the entire tech sector followed by the broader market. The five FAANG companies have a collective market capitalization of nearly $5 trillion. To put this in context, these five companies represent approximately 13 percent of the NASDAQ index. Put another way, if the market cap of the collective FAANG stocks was measured as a gross domestic product , they would be the fourth largest economy in the world.
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The MAMAA group of tech stocks has taken a beating so far in 2022, but there’s still plenty to like about each stock’s long-term outlook. The five MAMAA stocks have a combined market cap of more than $6.6 trillion. As of September 2022, the S&P 500’s total market cap was about $30.1 trillion, meaning these five stocks alone accounted for nearly 22% of the entire index’s weighting. Morningstar analyst Dan Romanoff says Microsoft’s pivot to cloud services and subscription software has the company well-positioned to continue to thrive.
It is expanding the Facebook “metaverse” through its virtual and augmented reality products, which will ultimately reduce the company’s dependence on ad revenue to generate profit. Between the main Facebook platform, Facebook Messenger, WhatsApp, and Instagram, 3.51 billion unique users log into one or more of the social media giant’s apps every month. That figure is rising, along with the average revenue per person , which hit $8.31 per person in the most recent quarter.
These are important fundamental benchmarks for money managers on Wall Street as well as the average investor on Main Street. Alphabet is in a league of its own, with almost double the net cash position of its closest FAANG competitor Apple. Overall, the Street is cautiously optimistic on Netflix stock, with a Moderate Buy consensus rating based on 13 Buys, 14 Holds, and four Sells. At $284.20, the average NFLX stock price target suggests a marginal downside from current levels. However, despite its challenges, Facebook rallied in the first half of 2021. Its core advertising business regained traction, and revenue growth per user started trending upward again.
Their sheer size means that any stock price movement can lead to disruptions in the stock market. Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication.
Still, for the average investor, that’s a lot to tie up into five stocks, even if they do represent the five largest stocks in the tech sector. The extraordinary size and influence of the FAANG stocks have prompted concerns about a potential bubble in FAANG stocks. These concerns started gaining prominence in 2018, when technology stocks, which had been driving consistent gains in the stock market, began losing their former strength. In November 2018, several FAANG stocks lost more than 20% of their valuations and were declared to be in bear territory.
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Ultimately, this “debate” between investors is best captured by the buying and selling patterns in the FAANG stocks themselves. Microsoftis the world’s largest software company and the parent company of the Windows operating system, LinkedIn professional what works on wall street deutsch social media platform and Xbox gaming brand. While the demand for AAPL’s next generation products and services over the years has been impressive, GOOGL has been at the forefront of shaping the future with its search services and cloud-based offerings.
The company’s EPS is expected to grow 91.3% in the current quarter, 50.5% in the current year and 7.8% next year. Its EPS is expected to grow at a 21% rate annually over the next five years. Analysts expect AAPL’s revenue to increase 22.1% in the current quarter , 29.1% in the current year, and 4.1% next year. The company’s EPS is expected to grow 54.7% in the current quarter, 57.3% in the current year and 2.9% next year. Also, AAPL’s EPS is expected to grow at a rate of 17.9% per annum over the next five years. AAPL – The COVID-19 pandemic has treated the FAANG stocks quite well thanks to the accelerated pace of digitization and internet adoption worldwide that it triggered.
- CNBC personality Jim Cramer first coined the term FANG in 2013 and amended the acronym to FAANG in 2017 to include the addition of Apple to the group.
- In the short-term, it’s more than likely to move in tandem with the overall stock market.
- In 2017, Apple was essentially a hardware company, relying almost entirely on sales of its iPhone, iPad, iMac and Apple Watch devices.
- Both businesses are rapidly expanding as the world relies more heavily on digital services to live, work, and play.
- The average price target among the 43 analysts covering NFLX stock is $305, suggesting just 4.3% upside.
Given the immediate challenges in the advertising business, however, Google’s revenue estimates have trended down hard in the last 90 days. This is an indication that investors are expecting, at least in the short term, more pain. In the last three months, there were 39 down-ward revisions for Google’s forward revenue estimates, which compares against 0 upward revisions.
Google: The Best FAANG Stock By Far
The top five S&P 500 GICS tech stocks by market cap in 2022 are Apple, Microsoft, Nvidia , Oracle and Broadcom . Leon isn’t alone in his belief that Netflix has a difficult journey ahead. The average price target among the 43 analysts covering NFLX stock is $305, suggesting just 4.3% upside. Alphabet stock has dropped sharply over the past year on concerns over a slowing economy and possible recession. The business’ performance has taken a hit from macroeconomic headwinds with revenue growth slowing to just 6% in its third quarter, or 11% in constant currency. Expanding into international markets isn’t cheap, but it’s an absolute necessity when competition is fierce in the United States.
Analysts generally agree that the company could see earnings per share grow by an average of 36 percent per year for the next five years. With so much positive news, one might suppose that Facebook stock is sky-high – but it’s not. As compared to its potential for growth, Facebook is on the cusp of being undervalued – that makes Facebook stock a buy. Many respected analysts lost interest in Facebook stock, and there was a general sense that it was time to sell.
In fact, Facebook saw four consecutive quarters of growth in this metric through the second quarter of 2021. That meant that — because the company was paying taxes on money it had already earned on paper — it took a $10 billion tax hit in saxo bank forex broker the fourth quarter of 2017 that would artificially inflate its P/E. Pair that with Alphabet’s significantly lower price-to-sales ratio, and Alphabet could be the better value buy of the two stocks despite the difference in P/E ratios.
These investors may be tempted to delay purchasing FAANG stocks, waiting for their valuations to decline. 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. As part of its plan to reaccelerate growth, Netflix is launching a lower-priced ad-supported plan in 12 countries in November. The ad-based plan is not expected to make a material difference to the fourth quarter. The analyst feels that Apple is “uniquely positioned” to maintain mid or high single-digit top-line growth and low or mid-teens EPS growth on a multi-year basis.
Daryanani expects EPS growth to be driven by higher gross margin resulting from easing supply chain issues, operating expense controls, and share buybacks. Daryanani reaffirmed a Buy rating on Apple stock and a price target of $190. While it may not duplicate the past 40 years, it has plenty of lucrative projects in the works. For example, Apple is focused on developing augmented reality technology, and it is expanding the Apple ecosystem to include subscription-based services.
The FAANG stock to avoid like the plague: Netflix
The first FAANG stock begging to be bought right now is Alphabet, the parent company of search engine Google, streaming platform YouTube, and autonomous vehicle company Waymo. MarketRank evaluates a company based on community opinion, dividend strength, institutional and insider ownership, earnings and valuation, and analysts forecasts. Let’s get down to valuation, because at the end of the day these are all different companies with different paths ahead, and therefore they should all have different valuations.
Apple’s fiscal fourth-quarter results exceeded analysts’ expectations, reflecting resilience amid challenging macro conditions. The company’s sales grew 8.1% to $90.1 billion, while earnings per share grew 4% to $1.29. Ongoing macro challenges have impacted the performance of several tech stocks, including the mighty FAANG. We will discuss the recent quarterly results of three FAANG stocks and pick the one in which Wall Street sees higher upside potential.
The Motley Fool has positions in and recommends Alphabet , Alphabet , Meta Platforms, Inc., and Netflix. Core inflation, which excludes more-volatile food and energy prices, was also lower than expected, rising just 0.3% from September and 6.3% over the last year. Netflix relies on consumer spending, which could be impacted by a recession. AAPL shares were trading at $127.66 per share on Tuesday afternoon, down $4.88 (-3.68%). Year-to-date, AAPL has declined -3.65%, versus a 11.20% rise in the benchmark S&P 500 index during the same period.
Both AAPL and GOOGL have A Sentiment Grades, reflecting greater analyst confidence in their improving financials over the coming years. Both the stocks have a B Quality Grade, in line with their robust fundamentals. A big reason for this is its absolutely dominant search engine, Google. Data from GlobalStats shows that Google has sustained at least a 91% global share of internet search — I repeat, a 91% global share of internet search — looking back more than two years.