What is a FAANG company?

By Anna Farley


FAANG is an acronym used to describe five prominent and well-performing companies: Facebook, Amazon, Apple, Netflix and Google—now Alphabet.

FAANG is an acronym. It stands for Facebook (NASDAQ: FB), Amazon.com (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Netflix (NASDAQ:NFLX) and Google—now Alphabet (NASDAQ:GOOGL).

The group of five represent some of the most prominent and best performing tech companies worldwide. By this point, all of them are household names.

They cover almost every aspect of the modern world. From smartphones and streaming to e-commerce and artificial intelligence.

And with their almost $7 trillion combined market value at time of writing, FAANG companies also account for around 14% of the entire US stock market’s $49 trillion market capitalization.

Given their considerable power, price movements among the FAANG companies have a knock-on effect for the stock market as a whole.

This means that even investors who don’t hold stakes in these five companies should definitely still keep an eye on them.

How FAANG came to be

It was Jim Cramer, host of CNBC’s Mad Money, who coined the acronym back in 2013. Back then in it was just “FANG”, but Apple was added in 2017 as it continued to gain prominence.

Cramer said the five companies were “totally dominant in their markets”.

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Some people also use the term FANGAM, which includes multinational tech giant Microsoft (NASDAQ: MSFT). With Microsoft in tow, the FANGAM market cap exceeds $9 trillion.

The five FAANG companies

Facebook – The social media heavyweight was founded by Mark Zuckerberg in 2004 and now has a $1.00 trillion market cap. Alongside its namesake platform, Facebook also owns messaging service WhatsApp, photo and video sharing platform Instagram, and virtual reality tech brand Oculus.

Amazon – A consumer behemoth founded by controversial figure Jeff Bezos in 1994. It has a $1.86 trillion market cap. Amazon’s e-commerce website, which initially only sold books, has ballooned over the years. That website is now the largest marketplace ever created, selling seemingly everything under the sun. Amazon is also a major player in the worlds of digital streaming and cloud computing.

Apple – This now 45-year-old tech company is the creator of the iPhone and iPad with a current market cap of $2.41 trillion. Apple has the distinction of being the first publicly traded US company to achieve an over $1 trillion valuation, and the first to have over $2 trillion a mere two years later. It was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne and has branched out in all kinds of directions, including Apple TV, Apple Pay, iCloud, and others.

Netflix – Founded as an online DVD rental firm in California in 1997, by duo Marc Randolph and Reed Hastings, Netflix is now the most popular subscription streaming service worldwide. Since then, it has branched out to creating its own massively popular shows like true crime documentary Tiger King. The firm’s paid memberships totalled almost 208 million in the first quarter of 2021 after a year many spent indoors watching television.

Google (Alphabet) – The multi-national conglomerate and search engine-owner was founded in 1998 and went by the Google name until 2015, when it changed its name to Alphabet. The company has a $1.73 trillion market cap and aside from its Google search engine, also owns video streaming platform YouTube, mobile operating system Android, and navigation and mapping platform Google Maps.

Advantages of FAANG stocks


The fact that these five are some of the biggest companies in the world right now is obviously attractive to many investors.

These are the movers and shakers of the tech world, with huge market influence, so there are definite advantages to investing.


All five performed exceptionally well during the pandemic, offering services like streaming and e-commerce that were in high demand while people were stuck at home.

These kinds of major tech stocks are also more appealing in troubled markets, being seen as more stable and less risky than smaller stocks.

In 2020 alone, Facebook stock was up 31%; Amazon stock climbed 74%; Apple stock rose 78%; Netflix stock 66%; and Alphabet stock was up 29%.

These stellar performances, at such a challenging time for many other companies, has further added to their appeal.


All five are known innovators making in-demand products. Whether that’s a popular social media site, the latest iPhone, or access to new seasons of a beloved TV show.

These five companies have a whole host of products on offer for customers, keeping them coming back.

Not only that, but the FAANG companies can all channel funds from other businesses towards innovation.

This makes it possible for them to not only rake in revenue from massively successful products, but also to invest back into developing the products of the future.

Alphabet, for example, has its Waymo self-driving cars – already offering rides in Phoenix and Arizona.

Disadvantages of FAANG


Given the size of the five companies, purchasing stock in any of them can be expensive. High demand for stocks in tech majors means that investing in FAANG stocks is far from cheap.

A single share in Amazon, for example, will set you back more than $3,700. Establishing a worthwhile stake requires a substantial investment.

Possible bubble

One big factor that can put off investors is the fear of a bubble. While their stellar financial performances cannot be denied, not everyone is convinced these trillion-dollar-plus valuations are really warranted.

Facebook, Amazon, Apple, Netflix, and Alphabet are all major players with a lot of appeal, but some fear a reckoning further down the road.

This much excitement and exuberance around a handful of stocks is a major warning sign that a bubble is there, and could well burst.

Potential Regulation

Regulation is a worry for all five companies. US lawmakers have drafted a number of bills aimed at limiting the power of big tech companies, aiming to make it harder for them to acquire their competitors.

This includes a draft bill making it unlawful for large platform operators to own businesses that create conflicts of interest. Another bill would prohibit platform operators giving preferential treatment to their own products.

The UK, meanwhile, is considering tougher regulation for streaming platforms like Netflix and Amazon Prime Video. This would require them to follow the same rules as other British broadcasters like the BBC.

Where’s the Value?

  • Playing with the big boys – these companies represent some of the biggest players and best performing tech stocks around

  • They are a pricey option – These companies may generally perform very well, but they are very expensive to invest in

  • Constant innovation – The companies are synonymous with innovation, meaning they always have something new to showcase which is great for the company and the investor alike

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This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Anna Farley does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Anna Farley has not been paid to produce this piece by the company or companies mentioned above.

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