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

Misery index
Glossary

Misery index

The misery index is constructed by adding the unemployment rate to the inflation rate.
10 Sep 2021
Could the “metaverse” be the next big investment theme?
Investment strategy

Could the “metaverse” be the next big investment theme?

The “metaverse” – the world of virtual reality – has been a theme in science fiction for decades. But it could soon become real. John Stepek explains …
2 Sep 2021
I wish I knew what the metaverse was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what the metaverse was, but I’m too embarrassed to ask

The term “metaverse” sounds like something out of a science fiction novel (and it is). But what does it actually mean?
24 Aug 2021
We should make the UK a nature reserve for our fledgling apps
UK Economy

We should make the UK a nature reserve for our fledgling apps

Britain has plenty of promising start-ups in the app economy. They could do with some nurturing, says Matthew Lynn.
22 Aug 2021

Most Popular

The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021