Are FANG stocks benefitting from the COVID-19 recovery?

Investors should look at technology stocks with long-term benefits from the latest earnings bounce as these companies have led the pick-up in earnings as economies start to emerge from COVID-19, according to ETF Securities.

What is even more important, the leading tech companies Facebook, Alphabet, Apple, and Amazon (FANG) would use their earnings power to transform their business for the future, the firm said.

But while some analysts said that some of these companies were getting the benefits of a COVID recovery spike in online advertising revenue that was likely to moderate, others remained more bullish, with the leading US investment bank forecasting that even if Alphabet did not maintain the earnings momentum reported in the June quarter, its full-year earnings would still be around 60% above its 2020 result.

ETF Securities head of distribution, Kanish Chugh, said investors should look beyond short-term share price blips and focus on strong growth stories that were coming out of all the FANG stocks.

“None of them are standing still,” Chugh said.

According to him, Facebook was working on an ambitious “metaverse” project, which involved allowing users to inhabit virtual worlds together and the company’s chief executive Mark Zuckerberg said that with developments such as this, the internet would take on an even bigger role in people’s daily lives than it did now.

At the same time, Amazon produced better-than-forecast earnings for two of its emerging businesses, its cloud business Amazon Web Services (AWS) and Amazon Advertising while

Apple reported that it had US$80 billion of cash on its balance sheet, ready to fund its next transformational move.