Big Tech Shares Lose Their Wall Street Spotlight
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What is the main topic discussed in this episode?
Here's your Money Briefing. I'm J.R. Whelan at The Wall Street Journal in New York. For a long time, when you wanted to track tech stocks, you started with the heavy hitters, Facebook, Amazon, Apple, Netflix, and Google. Well, now the spotlight has started to turn away from those big names, and we'll check in with the Journal Markets Reporter in a moment with some details. First, some money and market news you should know. Well, you don't need us to tell you this, but as the economy has improved, so has traffic congestion. In fact, a report from the Texas A&M Transportation Institute says that congestion has added about 12 minutes a day to the average car commute. Now, put another way, that's about 54 hours a year, or roughly the time it would take to binge watch five seasons of a TV show.
How have FAANG stocks performed over the past 12 months?
Congestion nationwide costs Americans about 8.8 billion hours a year, And it wastes about 3 billion gallons of fuel annually if you sit in traffic. Nationwide congestion rose steadily from the 1980s through the middle of the last decade before stalling briefly during the recession. And since 2009, it has grown by 26%.
You've heard us discuss tech shares lots of times here on Your Money Briefing with an emphasis on what many call the FAANG stocks. That's an acronym for Facebook, Amazon, Apple, Netflix, and Google's parent alphabet. But the FAANG stocks have lost their sharpness over the past 12 months, and Wall Street Journal markets reporter Michael Worsthorn is here with us and says Wall Street might be looking for new leaders. So, Michael, how bad has it gotten for this group of giant tech stocks?
So if you're looking at it on a year-to-date basis, these five stocks, they've all risen double-digit percentages. They have a pretty healthy gain. But that's not taking into account the fact that we had a pretty punishing year-end sell-off. A lot of those stock prices recovered quite a bit. If you look at, say, over the last 12 months, so from – last August up until this August, you'd see that a lot of those five stocks are down, if not basically flat from where they were last year.
Why are investors re-evaluating FAANG as a cohesive group?
So they really haven't seen a lot of movement despite the ups and downs, all this volatility we've seen around trade, around slowing growth. And that's really kept the broader stock market at bay. I mean, we've hit a new record for the S&P 500, but it was about 3% over where that record was in 2018. So there are a lot of people saying that without those five stocks really performing quite a bit better, you're going to see the stock market be in this real tough trading range for the future going forward.
It's gotten to a point where investors are actually pricing in slow growth for these stocks.
Very much. And for a lot of them, it's trying to look at these stocks as individual companies, individual components, and not this lockstep group that they have been treated as such before. Since I'd say 2015, certainly 2016 and after that, for a lot of investors, the saying just basically went, if you bought Facebook, it made sense to buy Apple, Amazon, and Netflix because all the benefits that were working for one worked for all of them. Now, because these companies are a lot more mature, because the macro issues facing a lot of companies around the world are becoming much more magnified, especially with trade tensions, investors are realizing that that doesn't work anymore. So you got to look at Netflix just for its ability to combat its other streaming rivals, whether it be Disney or whether it be Comcast or some of these other companies.
And that has to be very different from, say, how you look at Apple, a manufacturer. So there's more differentiation going on.
You know, each of these big tech companies in this group have faced challenges like Netflix, like you said. And speaking of Apple, it might be the one that has been able to brush off some of the decline because of the focus investors are placing on its service business.
And that's part of the differentiation is that investors are realizing that for some of these companies, they're
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:05–0:47
2
How have FAANG stocks performed over the past 12 months?
0:47–2:12
3
Why are investors re-evaluating FAANG as a cohesive group?
2:12–4:01
4
How is Apple’s services business changing investor sentiment?
4:01–5:45
5
Which types of software companies are drawing investor interest now?
5:45–6:56
6
What specific software names (ServiceNow, Atlassian) are investors favoring and why?
6:56–8:42
Speakers
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