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It was a major comeback year for FAANG stocks in 2023, as all five constituents have delivered stellar, market-beating returns. Notably, 2022 was nothing short of a nightmare for the group, as none of them outperformed the S&P 500 Index ($SPX), and only Apple (AAPL) declined less than the Nasdaq Composite ($NASX).
In fact, FAANGs were among the worst-performing S&P 500 stocks last year, and Meta Platforms (META) lost almost two-thirds of its market cap. Many analysts wrote “obituaries” for the FAANG stocks in 2022, while some others questioned whether names like Netflix (NFLX) still deserved a place in the coveted group, given its dismal price action and sagging revenue growth.
The 2023 price action is looking like a mirror image, though. Meta – which was the worst-performing FAANG last year – is the best performer this year, and the shares have almost tripled in value. On the other hand, Apple (which was the best-performing FAANG last year) is the group's worst performer in 2023. That said, the iPhone maker’s shares have still gained 55% this year, which exemplifies the stellar tech rally of 2023.
As 2023 draws to a close, here’s a performance recap of FAANG stocks, and how Wall Street rates these mega-cap stocks heading into 2024.
Meta Platforms Impressed with Its “Year of Efficiency”
Meta Platforms is the best-performing FAANG stock of 2023, and not without good reason. After its first annual revenue decline last year, Meta returned to double-digit top-line growth this year. CEO Mark Zuckerberg touted 2023 as the “year of efficiency,” and the company’s aggressive cost cuts led to a sharp rise in profitability. Meta's attractive valuations at the beginning of the year also helped support a rally in the Facebook parent company.
Meta Stock Forecast
Meta Platforms has received a “Strong Buy” rating from 37 of the 39 analysts following the shares, with only one “Moderate Buy” and “Strong Sell” rating to round out the opinions. The stock’s mean target price of $383.22 is about 8% higher than current price levels. Meta recently hit its highest point in 2 years - and looking at the stock's momentum, it might reclaim its $1 trillion market cap next year.
Amazon: The Second Best-Performing FAANG Stock in 2023
With a YTD gain of 79%, Amazon (AMZN) is so far the second-best performing FAANG stock of 2023. A combination of stabilizing revenue growth, margin expansion, and an increase in profits helped support the rally in Amazon stock this year - and while the revenue growth of its enterprise-focused Amazon Web Services (AWS) segment continued to taper down, it has shown signs of stabilization. Specifically, the company posted a record net profit in Q3 while its operating profit margins rose to the highest level since early 2021.
Wall Street Analysts Are Bullish on Amazon Stock
Wall Street is quite bullish on Amazon, and it has a “Strong Buy” rating from over 90% of the analysts. Only three of the 41 analysts covering AMZN rate it as a “Moderate Buy,” while 1 more calls it a “Hold.” Its overall rating of 4.88/5 is the highest among its FAANG peers, arriving slightly ahead of META. AMZN's mean target price of $174.90 is 13.7% higher than current prices.
Amazon is a top 2024 pick for multiple brokerages, including JPMorgan, Evercore ISI, Citi, TD Cowen, and Bernstein. That said, AMZN has been a “top analyst pick” for the last couple of years, including in 2021 - where it not only underperformed its tech peers, but barely managed to close in the green, even as the S&P 500 delivered strong double-digit returns.
Apple: The Worst-Performing FAANG Stock
Despite its 55% gain in 2023, Apple is the worst-performing FAANG stock of the year. It has been a lackluster year at best for the company. and its revenues fell in all four quarters of fiscal year 2023. The company is battling a slowdown in China - its biggest overseas market - and while it has increased its focus on the Indian market, higher sales there have not helped offset the slowdown in China. However, Apple's Services business continues to show resilience, and remains a long-term growth driver with an ever-rising base of installed devices.
AAPL Stock 2024 Forecast
Wall Street is not too bullish on the Cupertino-based company for 2024. Only about 60% of analysts covering AAPL stock have rated it as a “Strong Buy,” while about 11% rate it as a “Moderate Buy.” The remaining analysts rate it as a “Hold,” and the stock’s mean target price of $204.79 is only around 5% higher than current prices.
Netflix Impresses Markets with Its 2023 Performance
The biggest positive surprise from the FAANG cohort in 2023 was perhaps Netflix. The company lost subscribers in the first half of 2022, but seems to be back on the growth track now, thanks to its password-sharing crackdown and an ad-supported tier.
The company added 8.76 million net subscribers in Q3, while analysts were expecting the number to be around 5.5 million. For context, that's the highest since Q2 2020, when the streaming industry’s growth was turbocharged due to global lockdowns. Equally impressive was the guidance for Q4; Netflix said that the net subscriber adds in Q4 would be similar to Q3, “plus or minus a few million.”
Analysts Are Most Bearish on NFLX
Meanwhile, Wall Street analysts are the least bullish on NFLX as compared to its FAANG peers. Its consolidated rating of 4.08 is the lowest among all FAANG stocks, and only about 58% of analysts covering the stock rate it as a “Strong Buy.” Its mean target price of $456.38 is about 7% below current prices – the only FAANG stock where the consensus calls for the stock to drop in 2024.
Markets Are Apprehensive About Alphabet Stock
This was a mixed year for Alphabet (GOOG). A section of the market is still apprehensive about Alphabet as it is battling a slowdown in the advertisement market, and rising competition from the likes of TikTok is not helping matters.
Also, many believe that Google might lose market share in the search market, as Microsoft (MSFT) has upped its game with AI-powered Bing – thanks to its association with ChatGPT’s parent company OpenAI. The revenue growth of Alphabet’s cloud business also disappointed in Q3, sending the stock south by almost 10%.
GOOG Stock Forecast
GOOG has a “Strong Buy” rating from 78% of analysts, while 16% rate it as a “Hold.” The remaining analysts rate the stock as a “Moderate Buy.” Its mean target price of $152.38 is a premium of just about 6.6% from these levels.
To sum it up, both in terms of overall “Buy” ratings and expected upside, Amazon is Wall Street’s top pick for 2024, while Netflix is the FAANG stock that analysts are most bearish on, with consensus estimates calling for a 7.1% fall in the stock over the next 12 months.
On the date of publication, Mohit Oberoi had a position in: AAPL , AMZN , GOOG , META , MSFT . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
