FAANG Stocks: Full Form, Meaning & Why These Tech Giants Matter

Do you know that you must be using the services and products of faang stock in daily life? Yes, if you are wondering what are faang companies then these are Facebook, Amazon, Apple, Netflix, and Google, and all these five are used across the world.

However, have you ever considered investing in these stocks? If yes, then here are the details you must know about the faang stocks before investing in them.

What are FAANG Companies?

FAANG is the acronym for the top five tech companies around the world. These are Facebook, Amazon, Apple, Netflix and Google. Before 2017, it was known as FANG, as Apple was included in the term in 2017 by Jim Cramer and Bob Lang who introduced and popularized this term in 2013.

During 2010 and around, these companies garnered immense popularity and captured a significant market share. Around 2014-15, these stocks held around 7.4% of the market share of the broad market index S&P 500, which increased to approximately 14.4% by the end of 2019.

During this period, the market capitalization of the FAANG stocks grew rapidly by 178.5% while the S&P 500 index grew by only 46.5%.

List of FAANG Stocks in the Market

Description of FAANG Stocks

• Facebook (Meta): This Company in the FAANG companies list needs no introduction as Facebook now known as Meta has been everyone's favorite since 2004. Facebook revolutionized social media and networking and now creating a stream of income for many. The company’s main revenue source is online advertisements and other paid advertisements. Apart from Facebook, Meta includes Instagram, and WhatsApp as well. The current market capitalization of the Meta is around $1.31 trillion and this FAANG stock delivered a whopping return of 167.32% in the past five years.

• Amazon: The next FAANG stock is Amazon, which we use daily for many of our needs. Jeff Bezos incorporated Amazon in 1994 as a web-based bookstore. Later it ventured into the e-commerce sector and became one of the biggest technology firms in the world. From consumer electronics to web services, to e-commerce, Amazon has it all. Currently, it has a market cap of around $1.93 trillion and it offered nearly 90.84% in five years as stock returns.

• Apple: Everyone loves iPhones and iPads, but have you thought about how the Apple Company is performing nowadays? Whether is it a good investment or not? Let's see. Apple being one of the FAANG stocks, is undoubtedly one of the top technology giants, with its primary business verticals as smartphones, smart watches, apps, cloud storage, and also streaming platforms. The current market capitalization of the tech giant is $2.73 trillion, the highest of all the FAANG stocks. However, in the past year, the stock delivered only around 6% return, but the five-year return of the company stands nearly at 245%, which is the highest amongst the Faag companies list.

• Netflix: The fourth FAANG stock is your favorite OTT platform that is Netflix. This online streaming platform revolutionized the entire entertainment world. The company earns its revenue from subscriptions for its shows, movies, originals, and other content. However, as it is a new entrant in the FAANG list, the market capitalization of this company is yet to match that of the other four. At present, it has around $269.54 billion as market capitalization; however, it delivered around 66% in the past five years to its stakeholders as a return on investment.

• Google: The veteran amongst the FAANG companies is Google whose parent company is Alphabet and presently, it is the most popular search engine across the globe. While the main revenue source of the company is from advertisements and web services it offers, it also has a smartphone business. Google owns some of the most popular online platforms, which includes YouTube as well. The current market capitalization of the company is $1.97 trillion and it delivered around 146% in the past five years.

How to invest in FAANG stocks?

To invest in FAANG stocks, you have to open an overseas trading account. You can do the same using Indian stock brokerage houses, which have a partnership with US brokerage firms that facilitate overseas investments. Then you need to complete the KYC process and link your bank account.

Once the account opening process is complete, you can start looking for the ETFs, which invest in these stocks. Select the ETFs and decide the amount you want to invest. You can invest any amount up to US$250000 as that is the maximum limit set by RBI under its Liberalized Remittance Scheme (LRS).

Conclusion

FAANG Companies are not only the world’s top tech giants, but they are continuously delivering solid returns to their investors and shareholders. Therefore, if you are interested in technology stocks, and looking for long-term investment, then these stocks can be a good fit for your portfolio. However, you must analyze them individually to align your risk appetite and return expectations with that of these stocks.

FAQs on FAANG Stocks

1. Is it good to invest in FAANG stocks?

FAANG stocks delivered high returns in the past five years. Since these companies are well established in their industry, delivering solid returns, they can be considered good investment options. However, one must always analyze the stocks before investing.

2. What does FAANG stand for in stocks?

FAANG stands for the top five technology companies in the world, which are Facebook, Amazon, Apple, Netflix, and Google.

3. Are FAANG stocks overvalued?

Since these stocks are in high demand, and the companies are offering great returns, their prices are on the higher side. Moreover, the valuation of the stocks changes over time.