Investors love technology stocks because they’re looking for massive gains. Some of the biggest tech stocks, with the most compelling stories and greatest long-term potential, have become so iconic they have been given their own acronym: FANGMA.
FANGMA is an abbreviation that includes six of the biggest, top performing tech stock: Meta Platforms Inc (formerly Facebook), Amazon.com, Inc., Netflix Inc., Alphabet Inc’s Google, Microsoft Corporation, and Apple Inc.
Over the past number of years, FANGMA stocks have outpaced the growth of the broader S&P 500 and the tech heavy NASDAQ.
Apple, which has a market cap of $2.7 trillion, is the largest of the group, but Amazon and Microsoft are also part of the trillion-dollar club. In 2021, big tech stocks drove the S&P 500 to record levels, with FANGMA gaining on average 30.5%. More impressively, over recent trailing periods, FANGMA stocks have accounted for at least 40% of the indexes’ total return.
Why Should You Invest in Big Tech?
The same momentum that sent the S&P 500 to record levels in 2021 has not carried into 2022. Current headwinds, which include rising interest rates, inflation, and the supply chain crunch have weighed down that positive sentiment.
In the month of January, the tech-heavy NASDAQ lost 8.99% of its value, making it the worst January performance since 2008 and steepest single month drop since 2020. The losses were broad based with the S&P 500 down 5.3%.
In February, the S&P 500 slipped into correction territory (which is defined as a 10% drop from its most recent peak) while the Nasdaq fell into bear market territory (a drop of at least 20% from recent highs).
Despite the sell-off, big tech should continue to be some of the biggest financial winners on Wall Street. That’s because they provide products and services that people need.
- Meta Platforms owns two of largest social media sites in the world (Facebook and Instagram), as well as two of the biggest messaging apps (WhatsApp and Messenger).
- Amazon is the largest e-commerce company in the world.
- Alphabet is a tech giant that is home to Google, the world’s leading search engine. It also owns YouTube, Fitbit wearable devices, Pixel phones, and Google Nest home products.
- Netflix has evolved from a DVD-by-mail service to a streaming giant with more than 220 million subscribers.
- Microsoft is known for its software platforms which include Word, Office, Teams, Skype, Outlook.com, OneDrive, and LinkedIn.
- Apple is one of the world’s biggest smartphone manufacturers and has moved into streaming music and videos, gaming, news, and cloud storage.
These big tech stocks also have a history of reporting strong revenue and earnings growth.
Apple recently reported record revenue and earnings. Amazon’s 2021 revenue increased 22% with net income jumping 56%. Alphabet, Microsoft, and Amazon also reported exceptionally strong earnings and revenue growth. Even Meta Platforms’ “disappointing” earnings were strong, with profits up 35%.
Collectively, the FANGMA stocks increased their total profits more than 55% in 2021 to $320 billion with sales up 27% at $1.4 trillion. If FANGMA was a country, it would be ranked 13th in gross domestic product.
Over the past decade, the leading big tech companies—most notably Meta, Alphabet, Amazon, Apple, Netflix, and Microsoft—have come to dominate their respective segments. Despite their huge global penetration, the growth may be just starting.
Investing in FANGMA with Evolve ETFs
Gain exposure to six tech giants in one ETF. With the Evolve FANGMA Index ETF (TECH ETF) investors get exposure to all six companies – Facebook, Amazon, Netflix, Google, Microsoft and Apple – for a reasonable unit price. Make investing in big TECH easy. For more information visit the fund page here: https://evolveetfs.com/product/tech/
Bullish on big tech? The Evolve Enhanced FANGMA Index ETF (TECE ETF) allows investors to get 125% exposure* to all six tech giants. To learn more about this newly launched technology etf, visit: https://evolveetfs.com/product/tece/
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