96% return: Is last year’s equity fund winner still a good buy?
The acronym ‘FANG’ refers to the stocks of four popular US tech giants— Meta Platforms (Facebook), Amazon, Netflix and Alphabet (Google). The FANG+ index is a broader set of stocks, including Apple, Nvidia, Tesla, Twitter, as well as Broadcom and Snowflake. US big tech stocks, in general, scored big last year, coming off a painful 2022, when these stocks bled amid elevated interest rates, fears of impending recession and earnings disappointments.
After the initial uncertainty around reversal of the US Fed’s rate tightening regime, the markets have been emboldened about rate cuts starting this year. The spectre of recession, which loomed large at one point, has been mostly dissipated, replaced by expectations of a ‘soft landing’ for the US economy. Beyond this, a build-up of expectations around artificial intelligence (AI)-related technologies has set off a feeding frenzy in businesses building significant AI capabilities.
Together, these have given wings to the basket of tech behemoths, and have particularly lifted a highly focused tech-led index like the NYSE FANG+. Vikas Gupta, Chief Investment Strategist, OmniScience Capital, remarks, “The much anticipated recession in the US is unlikely to happen and inflation is also fairly under control. We expect rate cuts to start as early as March this year, with at least six likely cuts, higher than that suggested by Fed’s own estimates.”
Even as positives abound for continued momentum in these stocks, there are reasons to be more cautious in the future.
