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The FAANG stocks may also benefit from the incoming administration that may stall agreement on the antitrust and the break-up threats on some of the top US tech companies.
Wedbush Securities analyst Dan Ives has highlighted the potential source of boost for US FAANG stocks in the coming year 2021 which are closely tied to the plausible struggles of Chinese tech companies. According to a report from Business Insider, Ives noted that with the incessant crackdown on Chinese tech companies both at home and abroad, US FAANG stock will be an indirect beneficiary in the long run.
The domestic crackdown on Chinese tech firms including Alibaba Group Holding Ltd (HKG: 9988), and its associated Financial Technology company Ant Group took a new twist in the past week when Beijing’s State Administration for Market Regulation announced the launch of an antitrust investigation against Alibaba. As if it was a coordinated attack, Chinese finance regulators also summoned Ant Group to discuss its compliance processes. The Ant Group summon comes following the suspended $37 billion IPO plans of the firm, a listing that would have been the world’s biggest ever.
Ives and his team noted that “The Ant Financial IPO delay and further regulatory crackdown is a major black eye for the Chinese tech sector and thus cast a shadow over the space with Alibaba front and center,” adding that this regulatory crackdown, coupled with the incoming US administration, will create a “nirvana set up” for FAANG stocks and the overall US tech sector in 2021.
Overview of FAANG Stock amid Chinese Tech Clampdown
Despite the pangs of the COVID-19 pandemic, the FAANG stocks including that of Facebook Inc (NASDAQ: FB), Amazon.com Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), Netflix Inc (NASDAQ: NFLX), and Alphabet Inc (NASDAQ: GOOGL), have all witnessed impressive growth in 2020 as some of the key products and services they all over became pivotal both for businesses and individuals in the heat of the pandemic.
The Nasdaq 100 climbed 47% in 2020, while individual FAANG stocks soared. In just 2020, Facebook has gained 35%, Amazon 78%, Apple 86%, Netflix 61%, and Google’s parent Alphabet is up 32%. Dan Ives and his team believe that this rally will be complemented with an even bigger gain in the coming year.
Other analysts also share the positive position of the Wedbush analysts. Cowen Inc (NASDAQ: COWN) analyst, John Blackledge points out that tech stocks especially that of Amazon “has several drivers that should yield robust global revenue growth with rising margins the next several years.” Blackledge highlighted some of these drivers to include the further B2C eCommerce market share gains in large retail verticals, emerging eCommerce verticals like B2B, and significant opportunity in existing and newer Int’l markets like India, Mexico, and Australia which Amazon is set to harness amongst others.
The FAANG stocks may also benefit from the incoming administration which is poised to have a divided Congress that may stall agreement on the antitrust and the break-up threats on some of the top US tech companies.