The tech companies have faced severe selling pressure on concerns over the Fed raising rates several times this year to control multi-decade high inflation. While a rising-interest-rate environment could mar the growth of technology companies, it could be wise to consider FAANG stocks, which represent Meta Platforms (FB), formerly known as Facebook, Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Alphabet (GOOGL), due to their stable and low-risk nature.
Even though global supply chain disruption could dampen the technology industry’s expansion, increasing demand for advanced technologies amid the accelerating digital transformation should drive its growth.
Given the market dominance of FAANG, analysts are highly optimistic about the near-term performance of AMZN and NFLX. So, it could be wise to add these stocks to your watch list.
Amazon.com, Inc. (AMZN)
E-commerce giant AMZN engages in the retail sale of consumer products and subscriptions internationally. It operates through North America; International; and Amazon Web Services.
On March 01, 2022, AMZN announced that its Luna cloud gaming service is now available for all customers in the mainland United States with an expanded library of games and new features. This could lead to increasing demand for its solution.
AMZN’s net sales increased 9% year-over-year to $137.40 billion for the fourth quarter ended December 31, 2021. The company’s net income grew 98.6% year-over-year to $14.30 billion. Also, its EPS came in at $27.75, up 96.9% year-over-year.
For fiscal 2023, analysts expect AMZN’s EPS and revenue to increase 49% and 17.2% year-over-year to $72.89 and $634.73 billion, respectively. It surpassed Street EPS estimates in three of the trailing four quarters. Wall Street analysts expect the stock to hit $4,192.55 in the near term, which indicates a potential upside of 37.7%.
Netflix, Inc. (NFLX)
NFLX provides entertainment services. It offers TV series, documentaries, and feature films across various genres and languages. The company provides members the ability to receive streaming content through a host of Internet-connected devices.
On March 2, 2022, NFLX announced that it had entered into a combination agreement to acquire Next Games. Michael Verdu, Vice President of Games, NFLX, said, "We are excited for Next Games to join Netflix as a core studio in a strategic region and key talent market, expanding our internal game studio capabilities.”
NFLX’s total revenue increased 16% year-over-year to $7.72 billion for the fiscal fourth quarter ended December 31, 2021. The company’s net income came in at $607 million, representing a 12% year-over-year increase. Also, its EPS came in at $1.33, up 11.76% year-over-year.
Analysts expect NFLX’s EPS and revenue to increase 30.8% and 12.5% year-over-year to $14.40 and $37.58 billion, respectively, in fiscal 2023. It surpassed the consensus EPS estimates in three of the trailing four quarters. Wall Street analysts expect the stock to hit $511.59 in the near term, which indicates a potential upside of 41.1%.
AMZN shares were unchanged in after-hours trading Thursday. Year-to-date, AMZN has declined -5.69%, versus a -7.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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