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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
-
How to invest in nuclear powerWe need nuclear power to go green, says Dominic Frisby. But there is a better option than huge power stations
-
Chase slashes its easy-access savings rate – is it time to switch?The Chase easy-access savings account has proved popular with savers thanks to its competitive rate and bonus deals. But, as the rate has dropped, has it lost its charm?
