"FAANG Supporting US Stock Market Expected to Rise 25% More"

Source: Business Insider

[Asia Economy Reporter Yujin Cho] There is a forecast that the stocks of the five major U.S. tech companies supporting the market?Facebook, Amazon, Apple, Netflix, and Google, collectively known as 'FAANG'?will rise by another 25%.

Wedbush stated in a report on the 2nd (local time) that big tech companies, which led last year's market rally, along with cloud and cybersecurity-related firms, will drive market growth this year as the COVID-19 situation calms and the economy enters a recovery phase.

Dan Ives and Striker Bakke, analysts at Wedbush, said, "The rise in tech stocks so far is just the beginning," adding, "Due to the impact of government stimulus measures, tech stock prices are expected to increase by more than 25% over the next year."

They cited the tremendous profits Zoom, a video conferencing platform that benefited from the COVID-19 pandemic, achieved last year as raising expectations for tech sector earnings.

Supported by increased corporate demand due to the activation of telecommuting and remote work, Zoom posted a surprise Q4 revenue of $882.5 million, a 369% increase compared to the same period last year, exceeding market expectations. Net income also surpassed market forecasts, recording $1.22 per share based on adjusted figures, compared to the expected 79 cents per share.

The analysts noted, "As seen in cloud, cybersecurity, and 5G, demand driven by consumers and businesses signals a growth boom," and predicted, "Companies like Uber and Lyft will achieve their best performance as the COVID-19 recovery progresses."

They explained that companies like Uber and Lyft, which have experienced slow recovery, will also benefit from the economic rebound, as the lifting of COVID-19 lockdowns is likely to revive ride demand due to increased mobility.

They also viewed the political and diplomatic environment, where the Biden administration is expected to take a somewhat softened stance in the 'tech cold war' with China, as contributing to FAANG's strength.

The analysts added, "Debates over stock prices will continue, but strong fundamentals and a robust economic recovery will drive the stock market rally led by FAANG."