Stock Analysis & Ideas

This Analyst Says It’s Time to Reassess FAANG Stocks

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FAANG should be upgraded to MATANA stocks, says Principal Analyst and the Founder of Constellation Research, Ray Wang. However, TipRanks’ data shows only two of the six MATANA stocks have strong potential to outperform the market.

The new face of big tech stocks should be MATANA and not FAANG, said Principal Analyst and the Founder of Constellation Research, Ray Wang, in a video interview with Yahoo Finance Live. MATANA is the abbreviation of Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA), Amazon (NASDAQ:AMZN), Nvidia (NASDAQ:NVDA), and Alphabet (formerly Google) (NASDAQ:GOOGL). TipRanks’ data shows that Wall Street analysts maintain a bullish outlook on the shares of these tech giants. However, only two stocks (MSFT and AAPL) have an Outperform Smart Score.

Now, let’s examine why Wang’s recommendation holds ground in the current market dynamics. 

Why MATANA?

For years, the FAANG fraternity represented big tech players that included Meta Platforms (earlier Facebook) (NASDAQ:META), Apple, Amazon, Netflix (NASDAQ:NFLX), and Google. Wang suggests dropping Meta Platforms and Netflix from the list and adding Microsoft, Tesla, and Nvidia to the group. 

The analyst’s comments have come amid the underperformance of these mega-cap stocks in 2022. Not only this, the fact that Netflix and Meta are struggling more than the others to stay relevant to their stakeholders may have somewhat shaken Wang’s trust, triggering his suggestion to drop them from the FAANG list.

Notably, heightened competition is taking its toll on Netflix’s and Meta’s businesses. Further, the pullback in ad spending and regulatory concerns (primarily for Meta) remains a drag.   

What Does TipRanks’ Data Indicate? 

Using TipRanks’ stock comparison tool, here is the summary of how these big tech stocks stack up on TipRanks’ valuable datasets.

The graph shows that analysts maintain a Strong Buy rating consensus on AAPL, MSFT, AMZN, and GOOGL stocks. However, they are cautiously optimistic about TSLA and NVDA. Further, barring Apple and Microsoft (with a Smart Score of ‘Perfect 10’), the other four stocks sport a Neutral Smart Score on TipRanks, implying they could perform in line with the broader market. 

Bottom Line

Macro headwinds impacting consumer and enterprise spending and supply-chain shortages could continue to hurt the prospects of these tech giants. However, analysts’ favorable outlook indicates that the fundamentals of the MATANA stocks remain intact.

Notably, investors can leverage TipRanks’ valuable stock screeners like the Top Smart Score Stocks to find out which shares can outgrow others.

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