Meta Platforms Inc (META US, BUY, TP US$231)
Comment: The departure of Meta’s COO and several other key employees, a tougher 2H22 outlook due to weak consumer sentiment, and continued scrutiny by government antitrust regulators caused Meta’s stock to perform poorly in June.
Apple Inc (AAPL US, BUY, TP US$194)
Comment: Apple’s M2 chips should be a gamechanger for the company due to their increased efficiency compared with an already efficient set of M1 chips. MacBook sales numbers would be worth watching to see if the company can pass down the increased costs of these chips to its consumer, especially amidst weakening consumer demand.
Amazon Inc (AMZN US, BUY, TP US$156)
Comment: Amazon continues to work through its over-capacity and over-staffing issues which were a result of a surge in demand for its services during the pandemic – that has since tapered off. Sales numbers from its Prime Day event in July should be a good indication of which direction consumer demand is heading.
Netflix Inc (NFLX US, BUY, TP US$399)
Comment: Netflix continues to streamline its workforce, laying off another 300 employees as it attempts to better manage its expenses. Tailwinds from increasing popularity in streaming services compared to traditional TV should continue to help the company’s long-term growth plans.
Alphabet Inc (GOOGL US, BUY, TP US$2,879)
Comment: Potential fines and more antitrust investigations are forcing Alphabet to make adjustments to parts of its business model, and is a trend that we can expect to continue moving forward. Investors can also look forward to the company’s 20-for-1 stock split coming up on the 18th of July, which should make the stock more affordable to retail investors.
Microsoft Corp. (MSFT US, BUY, TP US$338)
Comment: Microsoft is gaining momentum with Azure, as the COVID-19 pandemic has accelerated migration to the cloud. Amid rising cybersecurity attacks and the ongoing Russia-Ukraine conflict, companies will continue to upgrade to higher-end licenses for enhanced security. Reopening of offices should also drive demand for Microsoft’s productivity software from small and medium sized businesses.
We remain OVERWEIGHT on the FAANGM. Overall, they remain attractive at 27x forward P/E, below pandemic lows – suggesting that inflated valuations over the last 2 years from Fed stimulus policies have largely been normalized. Our preferred picks are still GOOGL and MSFT due to high levels of corporate demand for their Cloud and productivity solutions. Long-term secular tailwinds for FAANGM industries remain intact.