The term FAANG denotes the five biggest technology companies in America: Meta (earlier Facebook), Apple, Amazon, Netflix, and Google (parent company Alphabet). They are also known as MAMAA, Big Tech, or the ‘Big Five’, as they contribute a massive 10% to the $31 trillion market capitalisation of the USA stock market.

The market value of FAANG exceeds $3 trillion, and they are considered among the most well-known companies globally. The term ‘FAANG’ was coined by the popular host of the CNBC program Mad Money, Jim Cramer to refer to the newest, hottest, and most exciting hitters of the tech industry.
 

All of these companies are traded on the NASDAQ and are also part of the S&P 500. Over the last decade, FAANG stocks, along with Microsoft, have seen growth that outpaces both the broader S&P 500 and the more tech-centric NASDAQ. Even an investor who does not own these stocks is affected by the price movements of these publicly traded companies.
 

In this article, we will analyse FAANG stocks and take a look at their performance in the last decade.

• FAANG stocks have achieved a 26.57% annualised growth over the past decade, significantly outperforming the S&P 500’s 10.58%.
• FAANG stocks represent 15% of the S&P 500 and 30% of the NASDAQ 100.
• Despite their impressive past performance, high share prices and ongoing regulatory challenges warrant careful research before investing.

This question arises yearly due to their influence on the market. In 2020, during the onset of the Covid-19 pandemic, all FAANG stocks performed well for various reasons. However, they later faced pressure, leading to a broader tech sell-off. A portion of this was due to profit-taking by institutional investors, who questioned whether these companies could maintain continuous earnings growth.
 

Tech stocks, known for their volatility, are often scrutinised, especially as companies like FAANG reach immense size and deal with sensitive consumer data. Despite concerns, FAANG stocks have historically outperformed the S&P 500. Since its 2012 debut, Meta has been the weakest performer, while Netflix has surged by 16 times, making it the best.
 

Together, FAANG companies account for 15% of the S&P 500 and 30% of the NASDAQ 100. If you include Microsoft instead of Netflix, those figures rise to 21% and 40%, respectively.
 

These stocks have mostly been praised from the standpoint of investment, given their proven track records and the management and leadership they possess in the industry.

Let us look at the growth story of each of these companies individually along with their past performances:
 

Meta Platforms Inc. (formerly Facebook)

Workforce: Over 87,314 employees

CEO: Mark Zuckerberg

Meta owns Facebook, Instagram, WhatsApp, and Messenger—some of the most widely used platforms in the world. The company makes a major chunk of its revenue through online advertisements to more than 3.59 billion people, who are active on at least one Meta platform.

The growth of Facebook’s revenue over the last decade has been around 2,203%. In 2023, the company earned a whopping $117 billion, a 36% increase from 2020.

To streamline operations, the company is making changes across the board, resizing its workforce and only recruiting new employees for priority-based roles. They are also making considerable investments in their network infrastructure and data centres and increasing AI capacity, which has resulted in an expenditure of $34–39 billion.

However, Meta also faces numerous lawsuits in more than 30 US states and 11 European countries, due to how the company uses the personal data of users data to train AI models.
 

Amazon.com Inc.

Workforce: More than 1,544,000 employees

CEO: Andrew R. Jassy

As one of the biggest e-commerce companies globally, Amazon hit $575 billion in net sales revenue worldwide in 2023. It made a profit of $30.4 billion, which is greater than its combined profit from its inception in 1997 to 2019.

Amazon owns a variety of businesses, including Amazon Web Services (AWS), Whole Foods Market, Zappos, Twitch, Audible, Ring, IMDb, Goodreads, PillPack, Amazon Prime Video, and Amazon Fresh.

Amazon also owns Alexa, its popular voice-activated virtual assistant technology, which powers a range of smart devices such as the Amazon Echo and other home automation products. But at the same time, the company also faces several lawsuits over its ‘dark pattern’ practices where e-commerce websites try to manipulate consumer choices by misleading or tricking users into doing something they originally didn’t intend to do.
 

Apple, Inc.

Workforce: Over 164000

CEO: Timothy D. Cook

Headquartered in Cupertino, California, Apple is one of the largest smartphone manufacturers in the world. Apple’s revenue has quadrupled in the last decade, grossing a whopping $1.65 trillion from iPhone sales which increased from 153.4 million in 2013 to 235 million in 2023.

Apple owns a range of businesses, including Beats Electronics, Shazam, and Apple Music. Additionally, Apple operates various services and products under its brand, such as the App Store, iCloud, Apple Pay, Apple TV+, and Apple Arcade.

However, the company faces a few challenges in the form of justifying its highly-priced products and increased competition, and incompatibility with other software and services.
 

Netflix, Inc.

Workforce: Over 11300

CEO: Wilmot Reed Hastings Jr.

Netflix transitioned from a DVD-by-mail service to an on-demand streaming service in 2012 and now caters to more than 200 million subscribers globally. As one of the largest buyer of TV series, movies, and shows, Netflix owns over 20 subsidiaries across diverse genres and languages.

The company's revenue in 2023 was around $33.7 billion, and it has shown impressive year-on-year growth over the last 10 years. The company also owns businesses such as Millarworld, an entertainment company specialising in comic books, and the video game studio Night School Studio. Additionally, Netflix has acquired the animation studio Animal Logic to expand its content production capabilities.

It has also signed a multi-year agreement with Sony Pictures Entertainment that gives it the sole streaming rights in the US for Sony’s theatrical releases.
 

GOOGLE - Alphabet Inc.

Workforce: Over 186779

CEO: Sundar Pichai

Google has repeatedly been featured in the ‘World's Most Innovative Companies’ and ‘America's Largest Public Companies’ lists and is also ranked 11th among Fortune 500 companies.

In 2023, Google's revenue stood at $305.63 billion, with the major chunk coming from advertising driven by online searches. While these results seem impressive, Google is witnessing a decline in revenue from its network websites. Google Search's global desktop market share has also been declining and has hit the lowest growth in 10 years.

Additionally, Google is also facing anti-trust issues in many countries and is accused of stifling competition and contollling all of advertising online. Google has also faced significant criticism for mishandling user data.

These tech giants have delivered unprecedented growth and innovation over the years and have had a huge impact on the lives of consumers globally. To carry forward this trend, they will need to keep innovating and bring more robust business models that can keep pace with the changing times.
 

As an investor, it is important to be mindful that past performances are in no way a guarantee of future success. Hence, it is always advisable to do thorough research before making any investment decisions.