When investing, it’s important to keep an eye on market developments to increase your chances of winning. FAANG is an acronym for Facebook, Apple, Amazon, Netflix, and Alphabet (Google), so it brings together the five technology companies with the greatest potential. Jim Cramer created this group to categorize companies with significant market potential, generating considerable excitement among investors. Various investment funds have taken interest in these companies, which are listed on the Nasdaq exchange. The Economic Power of FAANG Companies has played a major role in driving this enthusiasm, as their growth and influence continue to shape global markets.
This is the brand name for the most prominent technology organizations in the United States. Analysts coined this term in 2017, and since then, it has experienced periods of high market capitalization, generating profits for investors. Moreover, these companies had already distinguished themselves from other stocks in the market, making the timing of the acronym’s creation particularly fitting. The aim is to improve the identification of these organizations for users who wish to invest in them.
What is a FAANG Company?
Each of these companies was a sector leader and earned billions from their activities. Therefore, when the term was coined, some investment funds called themselves FAANG, which sparked adverse commentary on the stock market. However, despite the predictions of a tech bubble, it has yet to burst due to the fall in stock prices. Even so, investors have high hopes for these organizations in the medium and long term. FAANG stocks were extremely popular before the term was coined.
These companies’ growth potential is significant, as well as their top-quality products and services. In this regard, because users hold them in high regard, many specialists predict that these companies will have a bright financial future. Nevertheless, analysts expect FAANG profits to decline by 27% by the end of 2021, reflecting part of their potential. One of the reasons they are so popular is because these companies have done a remarkable job of merchandising. Therefore, virtually every user knows the names of Netflix, Apple, Amazon, or Facebook, with clients in every corner of the world.
Brief description of FAANG stocks
Each of these organizations offers specific solutions to its customers, from technology products to television series. In turn, the leaders of these companies continue to innovate to offer new products to users that meet market demands. All of this makes them one of the most attractive investment options in 2021. Given this, it’s clear that investing in the FAANGs is a great investment decision. This group is listed on the NASDAQ, so you should look for a broker that operates in this market. From there, all you have to do is add the corresponding deposit according to the amount you want to invest. It’s easy to buy shares in these companies, as they are some of the most sought-after in the business world.
The most important thing is to buy them at the right time to ensure adequate returns. Thus, all major brokers around the world offer the option to invest in these giants. The choice of intermediary can influence the commission rates, which may vary between lower and higher amounts; however, our primary focus is on maximizing growth potential. E-toro, Capital.com, and AVATRADE are some of the companies investors can turn to to buy shares in these companies. Alternatively, you can choose to invest solely in one of these alternatives depending on the potential and future you see for the coming years.
Importance of FAANG Companies
FAANGs are one of the most relevant acronyms in the financial markets due to the companies that comprise them. Facebook is an excellent example of this, as in the first quarter of 2021, it earned 4% more than in 2020. This attests to the sustainability of its business model, which has allowed it to increase profits for its shareholders. The pandemic has positively affected Amazon, enabling the company to consolidate its position as a leader in the international e-commerce business. Therefore, it has tripled its profits in the first half of the year compared to the previous cycle.
The same has happened with Apple, Netflix, and Google, which have steadily increased their value in the face of the flood of digital services. On the other hand, all of these companies are leaders in their niche and cover diverse sectors of the economy. This is why they are so influential to the global economy, and it seems as though this will not change in the short term. You already know, FAANG is the name given to Facebook, Apple, Amazon, Netflix, and Alphabet, which are currently the most capitalized technology companies. Initially, Apple was not part of the group, but as it has grown recently, they decided to join.
Conclusion
At the end of the 20th century, between 1997 and 2001, one of the last major bubbles in the financial markets developed and burst. During those years, the so-called dot-com crisis unfolded, as the bursting of the bubble significantly impacted growth companies that formed part of the emerging new economy—a term Brian Arthur coined to distinguish it from the traditional manufacturing-based economy. This new economy included companies such as Yahoo, Amazon, WorldCom, and Global Crossing, along with many others, many of which the crisis ultimately wiped out.
During those years, the NASDAQ stock market index appreciated by nearly 400%, becoming a real alternative to traditional indices like the Dow Jones for many investors. In March 2000, the NASDAQ reached its peak of 5,132 points, only to fall by up to 80% in September 2002, generating a relatively prolonged period of recession in Western economies. It wouldn’t be until more than 10 years later that the American technology index was able to recover to 5,132 points again. We must also keep in mind that at that time, interest rates in both the US and the Eurozone were close to 5%, and starting in 2000, both central banks gradually lowered these rates.
