FAANG and FAAMG Companies

Netflix will also reportedly be aggressively cracking down on password sharing in 2023. 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. In 2017, Apple was essentially a hardware company, relying almost entirely on sales of its iPhone, iPad, iMac and Apple Watch devices. Unfortunately, since then Meta’s revenue growth has stalled, including a 4.4% decline in revenue in the third quarter of 2022.

NASDAQ: NFLX

However, the NYSE FANG+ index tracks the five FAANG stocks and five other tech and tech-enabled leaders, including Microsoft. 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. It’s hard to talk about the general stock market without mentioning one or more FAANG stocks. The tech giants make up a sizable portion of the S&P 500 index, which means many investors already have at least some exposure to them. 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.

Apple (AAPL)

Since the S&P 500 is a broad representation of the market, the movement of the market mirrors the index’s movement. Their substantial growth has been buoyed by high-profile purchases made by large and influential investors such as Berkshire Hathaway (BRK), Soros Fund Management, and Renaissance Technologies. These are axes broker just a few of the many large investors who have added FAANG stocks to their portfolios because of their perceived strength, growth, or momentum.

Meta even launched a rival to Twitter – or X – which is called Threads. 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 2.9 billion monthly active users as of April 2024. This large influence over the index means that volatility in the stock price of the FAANG stocks can have a substantial effect on the performance of the S&P 500 in general.

How to invest in FAANG stocks?

However, their prominence also exposes them to potential risks, such as market sentiment-driven volatility, regulatory scrutiny, and challenges from the competitive landscape. Their colossal market capitalization, totaling 8.4 trillion dollars showcases their dominance and influence. Representing approximately 15% of the S&P 500, these tech giants have become key indicators of the US economy’s status. Which might just mean, for the crafty investor that this is the perfect time to invest. Alongside diversification, periodic risk assessments, gauging factors like market volatility, competitive threats, and regulatory challenges, shape investment decisions.

A positive earnings report can bolster stock prices, while any sign of financial distress can lead to dips. Given the immense market capitalization of FAANG stocks, even slight financial perturbations can have significant ramifications on broader market indices. With these impressive facts in mind, it is no wonder investors have been enthusiastic about the FANG stocks’ business prospects. This enthusiasm has been supported by the companies’ financial performance, which has caused substantial increases in their respective stock prices. Apple’s main strength is its ubiquitous iPhone which makes up the major portion of its sales. Apple made about $366 billion in total revenue in the financial year that ended on Sept. 30, 2021, with iPhones making up about 33% of the total sales.

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 $9 trillion as of Q2 2024. Your best bet among exchange-traded investments is the How to buy crypto with credit card MicroSectors FANG+ ETN, which counts FAANG stocks as about half its total portfolio. Since there are only five stocks in the FAANG, it wouldn’t be difficult to buy and hold all of them if you are looking for direct exposure.

In general, though, diversification helps reduce risk and potentially increase returns, so it might be worthwhile to invest across all FAANG stocks, plus many other stocks and assets like bonds. Netflix (NFLX) is one of the most prominent streaming platforms that continues to deepen its library of original content and expand globally. The company is also getting more into areas like live-event streaming and gaming. Meta (META) is a social media leader, owning networks such Facebook and Instagram, as well as the popular messaging platform WhatsApp. Keep in mind, however, that past performance is not a guarantee of future results, and you’ll need to analyze if/how these scalping forex guide stocks fit into your own portfolio.

1. The FAANGs might sound like a new rock band, but they’re actually some of the most successful and well-known tech companies in the world.
2. Since OpenAI’s ChatGPT launched, Alphabet has touted its own AI capabilities and introduced its own chatbot interface and AI assistant, Gemini, staking its claim as a leader in artificial intelligence (AI).
3. For instance, most benchmarks’ top five would include Microsoft instead of Netflix.
4. This information has been prepared by IG, a trading name of IG Markets Limited.
5. Unfortunately, the seemingly unstoppable ascension of FAANG stocks may have to come to an end.

Over the past year, as of late October 2024, Netflix stock has jumped over 89%, and it has gained over 168% over the past five years, despite a big downturn during that stretch. In total, the five core FAANG stocks make up about 32 percent of the index’s value. Add in Microsoft, and you have just six firms comprising nearly 45 percent of the index. Kiplinger is part of Future plc, an international media group and leading digital publisher.

You can purchase shares on NASDAQ through an online investment platform, as long as it offers US stocks, which many of the ones we’ve reviewed do. If you only invest in local stocks and shares then you aren’t diversifying your portfolio as much as you can. As the FAANGs aren’t on any UK stock market, you’d need to buy US stocks to get access to them, which helps to geographically diversify your portfolio (i.e. spread your investments out across the world).

Some brokers offer advice, to help you make the best choice with your investments, but they might charge you quite a hefty commission for this. These are considered to be some of the best tech companies to invest in globally, so if you’re looking into purchasing technology stocks, this is for you. Some investors might be put off by Netflix’s frothy valuation, and with good reason. The stock is currently selling for 51 times earnings and 11 times sales, but that only tells part of the story.