6 Tech Stocks That Have Crushed FAANG In 2019
Zacks Investment Research | Dec 15, 2019 10:03PM ET
The year 2019 has been a mixed affair for FAANG stocks so far. While returns from Netflix (NASDAQ:NFLX), Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) have been disappointing, Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) are witnessing an impressive run.
Negative headlines due to several macro issues, including the U.S.-China trade war and related tariffs, concerns over Brexit and Huawei ban, have been major overhangs for FAANG stocks this year.
However, these factors were offset by benefits from growing cloud computing as well as an expanding e-commerce market. Infusion of AI and ML technologies in almost every solution has been driving the performance of FAANG stocks.
Moreover, solid adoption of wearables and smart-connectivity solutions, including smart speakers, has been a major growth factor.
Notably, overall FAANG stocks have returned 43.7% on a year-to-date basis, outperforming the S&P 500’s rally of 25.2%.
Apple Best Performer, Netflix Worst
Apple is currently the best-performing stock among the FAANGs to date, thanks to its Services business momentum despite iPhone-related weaknesses. The company’s expanded portfolio that now includes new Apple Watch Series 5 and streaming service Apple TV+ is a key catalyst.
Meanwhile, despite the lingering issues related to user data and privacy along with the proliferation of fake news, terrorism-related content and political propaganda, Facebook’s user base continued to expand in the year. The company’s initiatives to improve privacy, transparency and authenticity of ads are likely to further boost user trust and engagement.
Year-to-Date Performance
Alphabet’s growing litigation issues and intensifying competition from Facebook in the U.S. digital ad market have been overhangs on the share price movement. Nevertheless, Google’s robust mobile search and Alphabet's focus on AI, cloud and home-automation space have been major growth drivers.
Amazon disappointed despite solid Prime momentum and strengthening AWS services. Rising transportation costs related to its free one-day shipping service remain an overhang and are likely to escalate further. Moreover, a weak start to the holiday season is concerning.
Netflix is currently the worst-performing stock among the FAANGs to date. Intensifying competition in the streaming market, primarily due to the entry of Disney and Apple, is expected to mar prospects for the streaming giant.
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Tech Stocks Outperform FAANG
The technology sector’s performance has been impressive so far this year. Currently, the Technology Select Sector SPDR (XLK) is up 44.4% year to date.
Here we pick six stocks that have outperformed the FAANG group on a year-to-date basis.
Year-to-Date Returns- Tech Stocks versus FAANG
Moreover, these stocks have a favorable combination of a Zacks Investment Research
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