Glossary

FAANG stocks

The acronym FAANG refers to Facebook, Amazon, Apple, Netflix and Google (Alphabet) – five American companies that have been among the top-performing stocks in recent years.

The acronym FAANG refers to Facebook, Amazon, Apple, Netflix and Google (Alphabet) – five American companies that have been among the top-performing stocks in recent years and are seen by many investors as core long-term holdings because of the way that they dominate the online economy. The acronym was coined by Jim Cramer, the host of the TV show Mad Money, as FANG in 2013; the second A (for Apple) was added later.

Under this definition, the FAANGs do not include a number of other major firms with comparable influence. The most important is Microsoft:
it is now as fast growing as its peers, but back in 2013 it was a laggard whose best days seemed long gone. However, when investors talk about the FAANGs today, they are usually referring to Microsoft as well.

The FAANGs are typically described as tech giants, but most are not listed in the tech sector. Index compilers class Apple and Microsoft as information technology, but Alphabet, Facebook and Netflix as communications services, and Amazon as consumer discretionary. The thread that links them is that they offer communication and data services that drive the evolution of the digital economy in a way that goes beyond computer hardware – they are responsible for far-reaching online platforms that most of us depend on every day.

The FAANGs are also used as a shorthand for a broader universe of large stocks that have strong market positions or star power (ie, they are going up at the time). A non-exhaustive list might include Adobe, Broadcom, Nvidia, PayPal and Salesforce, plus firms such as Mastercard and Visa (due to their role in online payments) and China’s Alibaba, Baidu and Tencent. Including Walt Disney (whose online service may be a key threat to Netflix) stretches this reasoning, while adding carmaker Tesla breaks it. Older tech firms such as Cisco, IBM, Intel and Oracle are rarely viewed as peers.

Recommended

Just how powerful is artificial intelligence becoming?
Tech stocks

Just how powerful is artificial intelligence becoming?

An uncannily human response from an artificial intelligence program sparked a minor panic last month. But just how powerful are machines getting – and…
2 Jul 2022
Marking to market
Glossary

Marking to market

This is the process of updating a portfolio to reflect the latest available prices.
23 Jun 2022
The Brussels effect – how the EU is raising standards around the world
Global Economy

The Brussels effect – how the EU is raising standards around the world

EU standards and consumer protection regulations have a habit of being enforced globally. Why is that? And is it such a bad thing?
20 Jun 2022
Hock Tan: the tech sector’s supreme dealmaker
People

Hock Tan: the tech sector’s supreme dealmaker

Broadcom’s boss Hock Tan has acquired a reputation as the industry’s prime dealmaker – a renown that suffered a blow under Donald Trump. Now he has an…
13 Jun 2022

Most Popular

Ray Dalio’s shrewd $10bn bet on the collapse of European stocks
European stockmarkets

Ray Dalio’s shrewd $10bn bet on the collapse of European stocks

Ray Dalio’s Bridgewater hedge fund is putting its money on a collapse in European stocks. It’s likely to pay off, says Matthew Lynn.
3 Jul 2022
Persimmon yields 12.3%, but can you trust the company to deliver?
Share tips

Persimmon yields 12.3%, but can you trust the company to deliver?

With a dividend yield of 12.3%, Persimmon looks like a highly attractive prospect for income investors. But that sort of yield can also indicate compa…
1 Jul 2022
Is inflation about to drop as recession takes hold?
UK Economy

Is inflation about to drop as recession takes hold?

Central banks are raising interest rates in an attempt to curb soaring inflation. But will that push the economy into recession? John Stepek looks at …
5 Jul 2022