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In 2021, analysts are mostly betting on coronavirus vaccine stocks. Besides, they believe in Tesla that advanced 743%, Nvidia which climbed almost 122%, and PayPal that gained 116.5%.
2020 ended on a robust optimistic note, and many hope the rally will continue, especially for the big stocks. However, analysts are warning that not all the big names will soar this year. For example, FAANG stocks are expected to diverge in 2021, with some of them breaking new record highs and some lagging behind.
FAANG stocks (the five most prominent and successful tech companies on the planet – Facebook Inc (NASDAQ: FB), Amazon.com Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), Netflix Inc (NASDAQ: NFLX), and Google LLC (NASDAQ: GOOGL) have both ups and downs in 2020. By the end of December, Apple and Amazon were both up about 80%, Netflix was up about 70%. Facebook and Google’s parent Alphabet gained only about 30%. The overall Nasdaq was up 43% in 2020.
Loup Ventures founder Gene Munster commented:
“The trade of advertising tech did not work in 2020. My point is simple, we think that there will be a further fracturing of FAANG.”
According to Munster, investors should pay close attention to Apple stock that may gain 51% to $200. With such a gain, Apple’s market capitalization stands good chances of surpassing a $3 trillion mark. The analyst has also warned that Facebook and Netflix will “start to fade away as FAANG fractures in 2021.” Meanwhile, Amazon will continue its strong performance.
Market Leadership Shift from FAANG Stocks and Prospects for 2021
Jim O’Neil, former chairman of Goldman Sachs Asset Management, also believes that FAANG stocks will diverge in 2021. According to O’Neil, market leadership may also shift away from them. In the interview with ETNOW, he said:
“I do not dismiss the possibility that we are in the later stages of a switch away from the big technology leadership of the past many years into more traditional cyclical stocks. It is very interesting that financials have had a good run in the past couple of weeks and indeed ever since the first vaccine was discovered, financials have made a significant recovery.”
He further added:
“There is a presumption that with an accelerated pace of economic recovery in 2021, we could see steepening yield curves which would be very good for many banks around the world. I do not dismiss the possibility that the leadership of equity markets will shift away from tech at least in some parts of 2021.”
John Praveen, portfolio manager at QMA, a PGIM company, agreed:
“What we saw in November and December is that the market already started broadening out … beyond the tech stocks, the mega stocks.”
In 2021, analysts are betting on coronavirus vaccine stocks. Besides, they believe in Tesla Inc (NASDAQ: TSLA) that advanced 743%, Nvidia Corporation (NASDAQ: NVDA) which climbed almost 122%, and PayPal Holdings Inc (NASDAQ: PYPL) that gained 116.5%.