For the past decade, analysts frequently used the acronym “FANG” to describe the tech giants that were taking the stock market to new heights. The constituent members of the group, for many, were inseparable: Facebook (NASDAQ:FB), Alphabet’s (NASDAQ:GOOG) Google, Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX). Each of these unique companies represented a disruptive force in their respective industries or consumer market sectors.
All of the companies had their astronomical growth at approximately the same time; during the prolonged bull market, these stocks roared together. In tandem, they helped cause the stock market’s upward trajectory for the past decade. Since these tech giants were responsible, in and of themselves, for driving global market growth, when you mentioned one, all the other members of the group were implicitly included. In short, these new economy behemoths, due to the collective influence, were indistinguishable and inseparable.
However, some fund managers are now ready to buck the trend or practice of including all of the stocks in the same investing basket. Many are beginning to realize the constituent parts of the FANG group have now exhibited more differences than similarities.
For example, even though Amazon is the 800-pound gorilla in the online retail sector, it still derives a significant portion of its revenue from its cloud operations. How does that make it similar to Google or Netflix, whose earnings are derived directly from their respective markets?
Additionally, the FANG stocks no longer exert the same influence over the broader market as they did during the decade-long bull market. According to S&P Dow Jones Indices, at one point in February, both Amazon and Netflix, whose shares are up 22% and 62%, respectively, year to date, accounted for more than 30% of the S&P 500’s 2018 gain. That proportion dropped to approximately 24% as of April 6.