FAANG shares still have room for improvement, likely rising as much as 50% this year, according to Fundstrat’s Tom Lee.
“You can’t really say you’re going to have reduced demand for these products,” he told CNBC.
Big Tech stocks such as Meta and Alphabet have seen a torrid rally in 2023 after last year’s selloff.
US mega-cap tech stocks have had a spectacular rally so far in 2023, and nothing may be stopping them.
According to Fundstrat’s Tom Lee, the so-called FAANG group of Big Tech stocks could rise 50% this year.
“Our base case for FAANG this year was that it could grow by as much as 50%,” Lee told CNBC on Wednesday, referring to America’s five largest tech companies, including Facebook (now Meta Platforms), Amazon, Apple , Netflix and Google. Collectively, stocks have gained around 36% so far in 2023, after falling 43% last year.
Lee said he expects FAANG stocks to rebound after a trying 2022, when tech and other growth stocks sold off as the Federal Reserve sharply hiked interest rates. He added that the bullish case for tech stocks, including non-FAANG companies, is stronger than he had previously expected.
“As this year has unfolded, it really seems that FAANG – and I’m a bit broader, including things like Nvidia and semi-finished – is so relevant to how you handle inflation , whether it’s through AI or automation, so they’re incredibly important companies,” he said.
Mega-cap stocks like Meta and Alphabet and Amazon have jumped 90%, 25% and 30%, respectively, so far this year. The gains were fueled by strong first-quarter corporate earnings that beat Wall Street estimates even as US GDP growth slowed.
“You can’t really say you’re going to have a drop in demand for these products. It’s actually going to go up and there’s no new competition,” Lee said. “So in fact their ability to make future profits is higher, and that’s why I think their private equity could grow. And again, that really pulls the whole market up.” , he continued.
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