What are FAAMNG Stocks?

For a start, let’s look into what FAAMNG is (not to confuse with FANG and FAANG). The term refers to 6 most successful tech companies in the world whose names are combined into this abbreviation – Facebook, Apple, Amazon, Netflix, Microsoft, and Google. Considered as modern-day titans on the market, they demonstrated phenomenal performance over the past few years. Here are several reasons for that.

Due to technological revolution that permeated all areas of our everyday lives – from communication to decision-making, FAAMNG companies have grown up immensely. Now, the products or services provided by these companies are spread to an extent that we cannot think anyone of us not using at least one. That is, be it Microsoft Office suite or Apple iPhone, there is hardly anyone nowadays who is not introduced into mentioned companies.

Moreover, the environment alone is not enough to sustain a long-lasting success on the market, especially if it concerns so rapidly changing one as tech. In order to withstand the competition, they are continuously evolving and fueling billions of dollars into research and development of new market proposals. Be it Amazon’s Go, a new type of smart store, or Google’s robots based on artificial intelligence, there’s always something an ordinary consumer will be surprised with.

Lastly, the glaring success on the market can be attributed to a strategy of aggressive expansion and everlasting marketing efforts by all of the companies. Take an example of Apple – the company recently launched a streaming service, Apple TV+, that grants a 1-year free when purchasing a new device. Or Amazon, which started as a mere book-seller and has grown into the biggest e-commerce giant in the world, besides providing streaming services. These are successful example of companies developed an ecosystem which continues to expand each year.

All of that justifies an unprecedented growth the companies demonstrated over the past decade. Such, for example, Netflix stock achieved over 3,000% growth over the span of past 10 years, which is driven by ever-increasing revenues, market share and cash flows. No wonder – all of FAAMNG companies are considered as modern-day innovation drivers and have their present in every home. That explains why FAAMNG stocks have been incredibly popular among investors.

FAAMNG stock overview 2020

Apple is hitting new heights in new 2020.

With stable upward trend, the stock of Apple Inc. (AAPL) is currently trading at $318.73, the new all-time record high. Apple is far ahead of the game, with the growth of 100% within past 12 months which is not comparable to any of FAAMNG peers, and leaving S&P 500 (with only 25%) far behind. Apple continues to set new records almost daily, being up by 6% already since the start of 2020. This year promises to be very good.

Facebook stays ahead of social media.

Coming only second after Apple, Facebook, Inc. (FB) stocks are traded at $222.14. Despite the past concerns over the privacy issue and uncertainty about Libra, Facebook nevertheless is only slightly behind a record-high of $222.38 in 2020. The Facebook social media platforms are still massively popular, including WhatsApp, Instagram and Messenger. The company’s CEO Mark Zuckerberg is intended focus on new technologies, including virtual and augmented reality, while promoting the privacy and decentralization of platforms. 2020 is the year of Facebook – “buy” is definitely a good choice.

Big 2020 ahead of Amazon.

Sold for $1,864.72, the stock of Amazon.com, Inc. (AMZN) is the most expensive one on the list. Even though the year did not start overly optimistically, The Wall Street experts are predicting that Amazon will take its place among Apple, Microsoft and Google’s parent Alphabet, making it back into a trillion-dollar club. Besides, this is one of the stocks Warren Buffer himself keeps in his portfolio. Amazon has not achieved a global dominion yet – which only means there’s more room to expand. It’s a good bet for the year ahead.

Google’s achieves first trillion benchmark.

Aplhabet Inc. (GOOG), Google parent company, has a strong start of 2020 – it’s been announced that the company strikes $1 trillion market cap. With stock priced at all-time-high $1,480.39 and anticipating even more increase, it has a promising year ahead. Being the largest search-engine in the world and deriving its revenue primarily from online-advertising, Google also has a lot of additional services such as Google Cloud, Google Play, Google Shopping and makes a strong emphasis on technological development. Robotics, space exploration, AI and driverless cars are just a few areas covered. Definitely a strong yes.

Netflix changes rules of the game by invading Oscar.

While some tech companies are conquering space, Netflix is competing for TVs. With stock being traded at $339.67, Netflix, Inc. (NFLX) also the most volatile stock among FAAMNG. Netflix, however, may have hard times competing in the space of online streaming which became overly crowded with lower-priced rivals entering the game last year. But on a positive note, Netflix is becoming increasingly focused on content, planning to produce exclusive movies and TV-shows that will be sought-after. Becoming the first ever streaming service receiving more Oscar nominations than a traditional studio, Netflix is still ahead of the game in a streaming space.

Microsoft’s focus on cloud may yield tangible results.

Microsoft Corporation (MSFT) is undergoing a boost of stock price which is currently sold at $167.10. Reporting solid results for fiscal quarter Q1 in 2020, Microsoft facilitates its position as a good company to invest in. Experiencing an increase in dividends, some estimates say that it is going to pay even more, what makes Microsoft stock even more attractive investment. With portfolio consisting of Microsoft Azure, Office 365, Dynamics 365, the company is increasingly expanding its cloud business. Microsoft stock for 2020 is highly recommended.

To Buy or Not to Buy?

2020 seems incredibly optimistic about FAAMNG. Indeed, with all 6 companies showing an upward trend in stock price, it is hard to imagine a different outcome but positive.

Yet, there is a major concern that FAAMNG stocks are overpriced. Making altogether more than 10% of S&P 500, the price of these stocks has only been soaring, giving investors more confidence in future good luck based on past success. Nowadays, with positive sentiment is raising even more, since 2020 promises a good year ahead. With more and more investors pouring their money into stock exchange, that makes the danger of stock being overhyped even more real.

How to avoid this? First of all, it is necessary to gain a basic understanding of company’s business, its strengths and weaknesses, its leadership and values. Besides, it is also essential to know the environment it operates in. For example, for major tech companies who deal with highly sensitive consumer data on day-to-day basis, such as Google or Facebook, the threat of being restricted by regulation is real.

Second, it is crucial to be certain in the company’s future. What long-term goals does the company pursue? Where the company is going to be in 5-10 years? These are the questions that have to be asked continuously, not least because the tech environment is highly dynamic and technology is constantly being pushed to new limits.

All in all, despite everyone’s euphoria for FAAMNG stocks in 2020, it is still worthy to show vigilance and make a well-grounded decision – this will return you in full.

 Conclusion

To summarize, FAAMNG stocks dominate the market and show the signs of even more lasting dominance in the new 2020. Having a bunch of ambitious projects under development, these companies are trend-setters rather than trend-followers in the mainstream market. All FAAMNG are promising a good return: some specifically for 2020, some on even longer time span. Nevertheless, still, it is worth making an informed decision examining all potential pitfalls before investing.