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1. What are the FAANG stocks?
2. How to invest in FAANG stocks with us
3. FAANG stocks in brief
4. Pros and cons of FAANG stocks
5. FAANG stocks summed up

What Are the FAANG Stocks?

FAANG is an acronym that refers to five of the most influential American technology companies: Facebook (now Meta Platforms), Apple, Amazon, Netflix, and Google (now Alphabet). The term was popularised by CNBC’s Jim Cramer in 2013 to spotlight a group of high-performing tech stocks with seemingly unstoppable momentum. Initially, it was just ‘FANG’ — with Apple added in 2017 due to its comparable scale and market impact.

These companies are widely recognised for their innovation, overwhelming sector dominance and significant impact on the global economy. Originally grouped together due to their strong stock market performance and growth potential, FAANG stocks have become a popular shorthand for US tech giants.

Together, the five companies are worth trillions of dollars and often up to a fifth of the total value the S&P500; and while all are NASDAQ-listed and in the technology sector, they are arguably fairly well diversified as a package deal.

Over the past decade, FAANG stocks have delivered impressive returns, often significantly outperforming the broader market. During bull markets, they have been primary drivers of index growth, and during downturns, their strong balance sheets and cash reserves have helped them rebound faster than many competitors.

The FAANG companies are also key players in several long-term investment themes. For instance, Alphabet and Meta are market leaders in artificial intelligence and machine learning — while all five companies play central roles in the digitisation of consumer and enterprise experiences. This makes them attractive to thematic investors — and makes them common components in many ETFs, further reinforcing their positions.

Beyond their US roots, another key feature of FAANG companies is that they operate on a truly global scale. Netflix streams in over 190 countries, Amazon delivers worldwide, and Apple’s iPhones are sold in virtually every major market.

Of course, while many investors believe that their market dominance means that further capital gains are in the offing, others think they are prime targets for an eventual tech bubble pop. But what is universally acknowledged is that the FAANG stocks aren’t going anywhere anytime soon.

How to invest in FAANG stocks with us

1. Learn more about the FAANG stocks
2. Download the IG Invest app or open a share dealing account online
3. Search for your desired stock on our app or web platform
4. Choose how many shares you’d like to buy
5. Place your deal and monitor your investment

Investors look to grow their capital through share price returns and dividends - if paid.

But the value of investments can fall as well as rise, past performance is no indicator of future returns, and you could get back less than your original investment.

For investors seeking exposure to diversified tech stocks, it’s worth noting that there is no ETF that only includes the FAANG shares.  However, a popular choice might be the Invesco QQQ Trust ETF which tracks the NASDAQ 100 — which includes all five — and comes with a moderate expense ratio of 0.2%. 

FAANG Stocks in Brief

Each FAANG company plays a significant role in the digital economy and has redefined its industry in a unique way.

Meta Platforms (formerly Facebook)

Meta Platforms is a global leader in social networking — and owns Facebook, Instagram and WhatsApp. It enjoys billions of monthly active users worldwide, generating most of its revenue through targeted digital advertising. In recent years, Meta has expanded into virtual and augmented reality via its Reality Labs division.

The massive user base and social media dominance makes Meta a revenue-generating titan, but this strength can also be viewed as a weakness as the company faces intense regulatory scrutiny and public criticism over privacy, misinformation, and its role in shaping political opinions and wider public discourse.

Apple

Apple is a consumer electronics trailblazer, best known for flagship products including the iPhone, iPad and Mac computers. It has created a powerful, seamless ecosystem of devices and services that keep customers deeply integrated into its platform. Apple's services division, including the App Store, iCloud and Apple Music, has over the years become a major growth engine.

Apple enjoys almost cultlike brand loyalty meaning that its premium hardware ecosystem can generate consistent, high-margin revenue. However, the stock relies heavily on iPhone sales, which can expose it to fluctuations in consumer demand, especially in China.

Amazon

Amazon started out as an online bookstore but has since evolved into the largest global e-commerce platform in the world, offering everything from tech to groceries. It’s also a market leader in cloud computing through Amazon Web Services which powers a significant portion of the internet. In addition, Amazon has invested heavily in logistics, artificial intelligence and smart devices like Alexa.

This diversified business model provides stable revenue across both retail and tech sectors — but thin retail offers thin margins within a highly competitive environment — while rising employee, shipping and regulatory costs continue to pressure profitability.

Netflix

Netflix revolutionised how people consume entertainment by pioneering the subscription-based streaming model — and killing Blockbuster in the process. Nowadays, it produces its own original films, series and documentaries, while also licensing third-party content. With a presence in over 190 countries, it’s one of the most recognised streaming brands in the world.

The global brand and unmistakeable original content give Netflix an edge in the increasingly crowded streaming market, but as Disney+, Amazon Prime Video and others continue to attract viewers, there is arguably a limit on subscriber growth and also continually rising content creation costs.

Alphabet (formerly Google)

Alphabet is the parent company of Google, which overwhelmingly dominates global internet search and digital advertising. The parent also owns YouTube, Android and Google Cloud — and is exploring innovation in areas like self-driving cars and AI through its subsidiary Waymo. However, advertising remains its primary revenue source, with the lion’s share generated through Google Search and YouTube ads.

Alphabet’s positioning in search and digital ads ensures a steady flow of high-margin revenue, but like Meta, this heavy reliance on ad revenue makes it vulnerable to economic downturns and continued regulatory actions targeting digital monopolies.

Pros and Cons of FAANG Stocks

As with all investing strategies, investing in FAANG stocks comes with both advantages and drawbacks.

Pros of FAANG stocks

• Brand power — the FAANG stocks enjoy strong brand recognition and huge market dominance in their respective niches
• Revenue — these shares sport consistent revenue growth driven by continued global demand and digital consumption, with further growth possible as the world advances
• Research — FAANG companies are leaders in innovation, particularly in artificial intelligence, cloud computing and consumer tech
• Diversification — these companies generated diversified income streams from multiple business segments, meaning protection from downside risk when one segment goes through a market dip

Cons of FAANG stocks

• Valuations — FAANG stocks come with very high valuations, which can lead to sharp corrections, for example if earnings disappoint
• Regulation — increasing regulatory scrutiny related to privacy, antitrust issues and content moderation is a key risk area
• Growth — there’s arguably slower growth potential compared to the past few years as these companies mature
• Sentiment — FAANG stocks are somewhat reliant on tech market sentiment and loose monetary policy, meaning they can be volatile in downturns or hawkish financial periods

FAANG Stocks Summed Up

• FAANG stands for Facebook (Meta), Apple, Amazon, Netflix, and Google (Alphabet), five dominant US tech firms known for their innovation, market leadership, and massive valuations
• These companies offer strong brand power, consistent revenue growth and diversified income streams; however, they face high valuations, regulatory pressures and slower growth potential as they mature
• Each company redefined its industry, from Apple’s ecosystem to Amazon’s e-commerce and cloud reach, but also faces unique challenges such as market saturation, rising costs or regulatory scrutiny
• FAANG stocks can be bought individually or via ETFs like the Invesco QQQ Trust (tracking the NASDAQ 100)