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Understanding the FAANG Stocks

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Updated on:
November 24, 2022

There’s nothing to be scared about with these stocks – they certainly won’t bite. But what they can do is help to give your portfolio some serious edge in the market. Read on to find out more about the fabled FAANG stocks.  

Simply put, FAANG is an acronym for five specific technology stocks that are all traded on the NASDAQ stock market. They are

These companies are grouped together for a number of reasons. Firstly, they are all technology companies that seemed to go from strength to strength broadly at the same time. They also mostly operate within the same market sector by focusing on general consumers, either through online streaming or social media.

Another similarity is that the stock performance of these companies has been very high compared with others over the past decade. These are the firms that typify the promise and potential of technological innovation. These companies are so big now that they even account for more than a quarter of NASDAQ’s total market capitalisation.

A hot topic in the media

The FAANG stocks are seen as growth stocks due to their strong market performance over the last ten years. While this boom has slowed recently with increased market volatility and uncertainty, some of the FAANG stocks have hit record highs with their share prices.

An example of their performance lies in the fact that Amazon and Apple recently became the first companies to be valued at over 1 trillion dollars by market capitalisation.

However, some analysts have been raising concerns around the presence of a tech bubble. For the more seasoned investors, this will raise memories of the early 2000s ‘dotcom bubble’ that saw the rapid rise and fall of a variety of technology stocks.

The current set of FAANG stocks seem to have more substance behind them than those that lost out in the dotcom bubble burst, but as with any stock, there is always a risk that needs to be considered. Due to their fame, it’s likely that each of these stocks will continue to be closely monitored by the market and media alike.

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