In this article, we will take a look at the 10 best FAANG stocks to buy now. If you want to explore similar stocks, you can also take a look at 5 Best FAANG Stocks To Buy Now.
FAANG is an acronym that stands for the five major technology companies listed on the US stock exchange: Meta Platforms, Inc. (NASDAQ:META) (formerly Facebook), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Netflix, Inc. (NASDAQ:NFLX), and Alphabet Inc. (NASDAQ:GOOG) (formerly Google). The term was coined by Jim Cramer, the host of Mad Money, in 2013. Since then, the term has gained widespread use in the financial industry to refer to the most dominant and successful tech companies in the world. These companies have experienced tremendous growth over the years, and their stocks have been among the top performers in the stock market. Overtime, FAANG has evolved to include other tech companies such as Microsoft Corporation (NASDAQ:MSFT), and as of recent, the term has become MAMAA.
“Free Cash Flow and Earnings Growth Will Improve Next Year”
On March 21 Dan Flax, senior research analyst at Neuberger Berman, appeared in an interview on CNBC where he discussed FAANG stocks, some stocks from the group he likes, and his outlook on the space. According to Dan Flax, right now the market is focusing on the growth potential of tech companies for 2023 and into 2024, and he thinks that the cost cutting measures that tech companies are taking will lead to improved free cash flow and earnings growth as we head into 2024. Here are some comments from Dan Flax:
“I think the market is focusing on the innovation and growth potential of these companies later this year, and into next year. You couple that with, we saw the move from Amazon.com, Inc. (NASDAQ:AMZN), they’re starting to take a much more aggressive stance in terms of managing costs. If they are able to do that, I suspect what we’ll see is that free cash flow and earnings growth will improve over the next year, and so that’s what I think the market is focused on.”
Some of the stocks that Dan Flax likes include Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META), and Apple Inc. (NASDAQ:AAPL).
Dan Flax likes Alphabet Inc. (NASDAQ:GOOG) and at current levels and noted that “the search business is durable” and even though the company is experiencing some near-term challenges, he believes that Alphabet Inc. (NASDAQ:GOOG) has “an underappreciated opportunity” in its cloud segment.
Other than Amazon’s (NASDAQ:AMZN) cost-cutting measures, Dan Flax likes the company’s “growth prospects in cloud” even though the company is experiencing similar cyclical pressures such as those that Alphabet Inc. (NASDAQ:GOOG) is experiencing. Dan Flax thinks that e-commerce “will continue to become more important to buyers and of course to third-party sellers”.
Dan Flax is bullish on Meta Platforms, Inc. (NASDAQ:META) because the company is transitioning its business and he is seeing “traction in reels”.
Finally, Apple Inc. (NASDAQ:AAPL) is one of Dan Flax’s top picks among the FAANGs. Though Apple Inc. (NASDAQ:AAPL) is experiencing some consumer-facing pressures, Dan Flax likes the company because its “product cycles are healthy” and “the installed base in iPhone is growing, and the services business remains robust”.
Dan Flax also addressed concerns about Alphabet Inc. (NASDAQ:GOOG) falling behind in generative AI, particularly in light of the growing popularity of ChatGPT. Flax reassured that Alphabet Inc. (NASDAQ:GOOG) “has a tremendous amount of intellectual property” around artificial intelligence and he expects the company to bring new and innovative AI products to the market in the near future.
FAANG stocks have become household names due to their impact on the tech industry and the wider economy. They have transformed the way people interact, consume media, and shop online, and their influence extends far beyond the United States. We have compiled a list of the best FAANG stocks to buy now according to hedge funds, which include Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:META). Let’s now discuss these stocks, among others, in detail below.
Photo by Pascal Bernardon on Unsplash
Our Methodology
To determine the best FAANG stocks to buy now, we scanned Insider Monkey’s database to identify big tech companies that are the most widely held by elite money managers. As of Q4 2022, Insider Monkey tracks 943 hedge funds. Along with each stock, we have mentioned the hedge fund sentiment, analyst ratings, and top shareholders. These stocks are ranked in ascending order of the number of hedge funds that have stakes in them.
Best FAANG Stocks To Buy Now
10. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 97
On April 11, KeyBanc analyst John Vinh raised his price target on Advanced Micro Devices, Inc. (NASDAQ:AMD) to $110 from $95 and maintained an Overweight rating on the shares.
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the best FAANG stocks to buy now. As of April 13, the stock has gained 43.85% year to date. The company also has abundant free cash flow. According to the company’s balance sheet, Advanced Micro Devices, Inc. (NASDAQ:AMD) has a trailing twelve-month FCF of $3.5 billion.
Advanced Micro Devices, Inc. (NASDAQ:AMD) was a part of 97 hedge funds’ portfolios at the end of Q4 2022. These funds held collective positions worth $5.7 billion in the company. As of December 31, Citadel Investment Group is the top investor in the company and has a stake worth $424 million.
In addition to Advanced Micro Devices, Inc. (NASDAQ:AMD), other big tech stocks that are popular among institutional investors include Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:META).
9. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 99
On March 15, Adobe Inc. (NASDAQ:ADBE) posted earnings for the first quarter of fiscal 2023. The company generated a revenue of $4.66 billion, up 9.22% year over year and ahead of Wall Street consensus by $30.27 million. Adobe Inc. (NASDAQ:ADBE) reported an EPS of $3.80 and outperformed EPS estimates by $0.12. As of April 13, Adobe Inc. (NASDAQ:ADBE) has returned 31.56% to investors over the past 6 months.
This March, RBC Capital analyst Matthew Swanson raised his price target on Adobe Inc. (NASDAQ:ADBE) to $415 from $395 and reiterated an Outperform rating on the shares. The stock is placed ninth on our list of the best FAANG stocks to buy now.
At the end of Q4 2022, 99 hedge funds were long Adobe Inc. (NASDAQ:ADBE) and disclosed stakes worth $8.38 billion in the company. Of those, Fundsmith LLP was the leading investor in the company and disclosed a position worth $709 million.
Here is what Andvari Associates had to say about Adobe Inc. (NASDAQ:ADBE) in its fourth-quarter 2022 investor letter:
“Adobe Inc. (NASDAQ:ADBE) is one of several software companies we own. Its suite of creative products (Photoshop, Illustrator, Acrobat, Lightroom, etc.) are the industry standard for creative professionals. Adobe also has a suite of customer experience products that help other businesses sell more easily to consumers. All of Adobe’s products have high switching costs and sold on a subscription basis.
Adobe’s business qualities enable extremely high margins and predictable, recurring revenues. The company had revenues of $17.6 billion in its last fiscal year with operating margins in the mid-30s. The company has also grown revenues at double-digit rates every year since 2015. Despite a good record of investing in its businesses, it still has an excess of cash on its balance sheet. As such, Adobe has returned cash to shareholders in the form of share buybacks. Since 2015 the company has returned a total of $24.5 billion.”
8. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 106
At the close of the fourth quarter of 2022, 106 hedge funds were eager on NVIDIA Corporation (NASDAQ:NVDA) and held collective positions worth $6 billion in the company. Of those, Matrix Capital Management was the largest stockholder and disclosed a stake worth $741 million.
Wall Street is bullish on NVIDIA Corporation (NASDAQ:NVDA). On April 11, KeyBanc raised its price target on the stock to $320 from $280 and maintained an Overweight rating on the shares. As of April 13, NVIDIA Corporation (NASDAQ:NVDA) has gained 84.84% year to date. NVIDIA Corporation (NASDAQ:NVDA) is one of the best FAANG stocks to buy now, according to hedge funds.
On February 22, NVIDIA Corporation (NASDAQ:NVDA) announced earnings for FQ4 of 2023. The company reported an EPS of $0.88 and beat EPS estimates by $0.08. NVIDIA Corporation (NASDAQ:NVDA) generated a revenue of $6.05 billion and outperformed revenue consensus by $31.61 million.
Here is what ClearBridge Investments had to say about NVIDIA Corporation (NASDAQ:NVDA) in its Q4 2022 investor letter:
“Promoting diversification and managing risk continue to guide our transaction activity, with a focus on the earnings trajectory of existing and potential holdings leading to our most recent moves. We are directing our research efforts to identifying names that are closer to the bottom than the top in terms of earnings and valuations, adding to our positions in ASML, the leading supplier of high-end production equipment to chip makers, and NVIDIA Corporation (NASDAQ:NVDA), whose valuation has washed out due to weakness in gaming and crypto mining as well as slowing enterprise spending.”
7. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 113
Alibaba Group Holding Limited (NYSE:BABA) is on the rise and is being eyed by both hedge funds and analysts. As of April 13, the stock has gained 31.70% over the past 6 months.
On April 4, HSBC analyst Charlene Liu raised her price target on Alibaba Group Holding Limited (NYSE:BABA) to $143 from $138 and reiterated a Buy rating on the shares.
On February 23, Alibaba Group Holding Limited (NYSE:BABA) posted strong earnings for FQ3 of 2023. The company’s revenue for the quarter amounted to $35.90 billion and beat Wall Street estimates by $11.30 million. Alibaba Group Holding Limited (NYSE:BABA) reported an EPS of $2.79 and outperformed EPS consensus by $0.39.
Alibaba Group Holding Limited (NYSE:BABA) is one of the best FAANG stocks to buy now according to hedge funds. The stock was held by 113 hedge funds at the end of Q4 2022. These funds held positions worth $5.6 billion in the company. As of December 31, Coatue Management is the top shareholder in the company and held a stake worth $440 million.
6. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 117
Wall Street analysts are bullish on Netflix, Inc. (NASDAQ:NFLX). On April 12, Citi reiterated a Buy rating on the stock along with its $400 price target.
According to the company’s balance sheet, Netflix, Inc. (NASDAQ:NFLX) has a trailing twelve-month FCF of $1.6 billion. The stock has gone up by 50.52% over the past 6 months. Netflix, Inc. (NASDAQ:NFLX) is placed sixth on our list of the best FAANG stocks to buy now.
Netflix, Inc. (NASDAQ:NFLX) was spotted on 117 investors’ portfolios at the close of Q4 2022 that disclosed stakes worth $8 billion in the company. Of those, Eagle Capital Management was the top investor and held a stake worth $1.5 billion.
Broyhill Asset Management made the following comment about Netflix, Inc. (NASDAQ:NFLX) in its Q4 2022 investor letter:
“Speaking of fresh names, we established a new position in Netflix, Inc. (NASDAQ:NFLX) during the second half. We began accumulating shares after the company reported two consecutive quarters of subscriber losses, which brought the stock down by about 75% from peak to trough. Our investment in Netflix is a good example of what we categorize as a “temporary dislocation” and a great example of the historical investments we’ve made in the tech sector. Unlike other “value” investors, we don’t arbitrarily put tech in the “too hard” pile. We are comfortable and more than happy to underwrite investments in the industry. We just demand a margin of safety when doing it (something often ignored by other investors in the industry). That margin of safety opened up when consensus quickly concluded that Netflix’s growth was over, on the heels of two quarters of subscriber losses, which happened to follow years of surging lock-down-induced demand. The popular narrative was that by pursuing advertising revenue, Netflix was all but admitting that streaming television was completely saturated. We thought otherwise. With ~ 75MM subscribers in the US, even converting a small portion of those 100MM moochers would move the needle3. And given the superiority of the company’s technology and first-party user data, we think the consensus is completely underestimating the long-term potential of a Netflix advertising model.”
Some of analysts’ and hedge funds’ top tech stock picks include Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:META).
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Disclosure: None. 10 Best FAANG Stocks To Buy Now is originally published on Insider Monkey.
