Many asset managers say Microsoft, Meta, Amazon, Apple, Netflix, and Google are looking attractive after being hammered in 2022.
Widely referred to as FAANG stocks, the big US tech companies have enjoyed exceptional performance over the last decade.
Jitanchandra Solanki, the financial markets author at Admirals, highlighted that if you invested in all FAANG stocks at the end of 2009, you would have been up around 1,500%.
However, shifts in the economy like high inflation and global geopolitical tension has seen large tech stocks hammered.
Netflix and Meta, which owns Facebook, have been particularly hard hit. They are down around 60% this year.
The huge decline has created opportunities for investors, with numerous fund managers and analysts saying it may be time to buy these shares.
Zwelakhe Mnguni from Benguela Global Fund Managers picked Microsoft as his preferred mega-cap tech stock.
Mnguni said Microsoft is a well-run company with a good product portfolio and a large amount of annuity income.
“Microsoft is not a screaming buy, but tactically it is a good place to put your money during the current market turbulence,” he said.
Viv Govender from Rand Swiss Offshore agreed, saying the Microsoft share price has come off significantly in recent months.
He explained that Microsoft’s software is so embedded in the market that they have a secure revenue stream, even during tough times.
Sasfin Securities’ David Shapiro likes Meta. He said they generate huge amounts of money and reinvest the money to ensure they stay ahead.
He added that a big decline in the share price means Meta is reaching levels where it is looking attractive.
Hans Albrecht from Horizons ETFs likes Netflix, especially after the announcement of its ad-supported service.
He predicts that Netflix will take ad share away from competitors and will start to price ad space aggressively for Super Bowl-type content.
Albrecht added that most Netflix subscribers who’ve cancelled the service said that they would come back at a lower price point. The ad-supported service will achieve that.
It is also telling that the world’s best investors have been buying large-cap tech stocks, including Alphabet (Google), Meta, Amazon, and Microsoft, over the last few months.
Quarterly reports from investment managers with assets of $100 million or more show that they put most of their money into large-cap US tech stocks over the last few months.
Alphabet, Meta, Amazon, Microsoft, and Netflix have all seen big investments from large funds.
With this in mind, here is a summary of the big US tech stocks and their performance over the past few years.
|Share price decline from recent peak||32%||65%||39%||22%||36%||64%|
|Current P/E (TTM)||24.4||21.4||98.8||22.4||17.3||11.1|
|10-Year average P/E||26.9||161.3||166.2||18.3||30.5||45.5|