FAANGM Monthly: December – 23 Muted end to 2023 January 17, 2024 121

  • FAANGM ended 2023 +2.4% in December, lagging both the Nasdaq (+5.5%), and the S&P 500 (+4.4%). However, it still ended the year +62.4%, beating both indexes comfortably.
  • META (+8.2%) was the biggest gainer, spurred by continued positive earnings momentum. While MSFT (-0.8%) was the main laggard.
  • FAANGM valuations remain below their 10-year average of 32x. We believe there is room to grow given earnings upside for Digital advertising and Cloud-related companies, while demand for tech hardware remains soft. We maintain an OVERWEIGHT recommendation on FAANGM.




FAANGM ended 2023 slightly muted, with a +2.4% gain in Dec, lagging both the Nasdaq (+5.5%), and the S&P 500 (+4.4%). However, FAANGM still outperformed both indexes on a 3-month and YTD basis, posting gains of +14.6%, and +62.4%, respectively.


Gainers: META (+8.2%) was the biggest gainer in the month, spurred by continued earnings momentum, and strong early 4Q23 demand for its digital advertising services.


Laggards: MSFT (-0.8%) was the laggard as price consolidated after a 20+% run up since late Sep 23.


Valuations: FAANGM 12M forward P/E (31x) still remains slightly below its long-term average of 32x. Fundamentally, most FAANGM companies are healthier now vs 12 months ago after some serious cost-cutting during the year, while growth also returned vs 2022. We believe there still is room to grow given the expected earnings upside for digital advertising (META, GOOGL, NFLX) and Cloud-related companies (AMZN, MSFT). Demand for tech hardware like PCs and smartphone still remains weak.



Meta Platforms Inc (META US, BUY, TP US$375)

  • Facing US$600mn lawsuit from Spanish media association. The AMI newspaper publishing association in Spain has filed a US$600mn lawsuit against META, alleging unfair competition in the advertising market. The complaint revolves around the systemic use of personal data from Meta users without consent which violates data protection rule.


Comment: META ends the year with yet another lawsuit from the EU, adding to the  ~US$2bn in fines it has paid in 2023. We expect this trend to continue as smaller businesses and organisations across the world fight for what they deem is their fair share of the digital advertising pie. However, we don’t expect this to be a major roadblock for META given it would cost them only 3-4 days of revenue to pay off accumulated fines for 2023. META’s fundamentals continue to improve after a huge year of cost cuts and improving digital advertising demand.





  • Ramping up Vision Pro production ahead of Feb 24 launch. AAPL is reportedly in the midst of ramping up production of its mixed-reality headset, Vision Pro, slightly over 6 months after announcing its launch in Jun 23. The mixed-reality headset will be AAPL’s biggest entry into a new product area in nearly 10 years.


Comment: With the majority of AAPL’s revenue still coming from its iPhones, we are doubtful of significant revenue contribution from Vision Pro given its high price and limited adoption and market potential in the near term. We continue to expect services growth to drive overall expansion in the near term, while product sales remain muted.




Amazon.com Inc (AMZN US, BUY, TP US$190)

  • Ads coming to Amazon Prime Video in Jan 23. AMZN announced that it would start incorporating advertisements in its movies and television series. Amazon’s Prime Video will automatically start streaming ads unless subscribers opt to pay an extra US$2.99. Amazon is incorporating ads in a bid to boost revenue, joining Netflix (NFLX) and others that have done the same.
  • Amazon to invest US$17.9bn, create more than 9,000 jobs in Canada as it boosts Cloud exposure. Amazon’s unit, Amazon Web Services (AWS) has launched its second AWS infrastructure Region in Canada. AWS is planning to invest more than US$17.9bn in its infrastructure in Canada through 2037, and will also support an average of more than 9.3K full-time equivalent jobs annually. AWS users will have access to advanced AWS technologies, including data analytics, security, machine learning, and artificial intelligence, to drive innovation.


Comment: AMZN could see a boost in margins and revenue in 2024 thanks to Prime Video soon getting ads. We believe advertising remains AMZN’s largest growth opportunity given its ability to efficiently use first-party data collected on its platforms. Advertising only contributes 8% of the company’s total revenue presently.

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