What are GAFAM stocks?
GAFAM refers to five highly regarded U.S. tech stocks: Alphabet, Apple, Facebook, Amazon, and Microsoft.
GAFAM is distinct from the increasingly common abbreviation FAANG, which refers to U.S. technology stocks such as Facebook, Apple, Amazon, Netflix, and Google. Netflix replaces Microsoft.
Understanding GAFAM Stocks
Several market indices follow sector trends, although a few corporations dominate in terms of sector influence. The acronyms FAANG, GAFAM, and BATX refer to significant corporations that significantly affect their industries and the market. GOOG, AAPL, Meta (META) (previously Facebook), AMZN, and MSFT comprise GAFAM. All five firms are NASDAQ-listed.
GAFAM vs. FAANG
Netflix, with its media content business, is the sole company in the “consumer services” and “consumer electronics/video chains” sub-sectors of the FAANG group, while the other four businesses are in the “technology” area.
GAFAM denotes a collection of technology-focused enterprises, replacing Netflix with Microsoft.
Amazon, classified under the “consumer services” sector and “catalog/specialty distribution” subsector, is a major technological contributor with its cloud hosting and Amazon Web Services (AWS) businesses.
In summary, GAFAM represents U.S.U.S. technology leaders in mobile, desktop, hosting, online operations, and software products. As of March 31, 2020, the five GAFAM corporations have a combined market valuation of $4.5 trillion, ranking among the top US companies. Apple holds the oldest GAFAM stock listing, with its 1980 IPO, followed by Microsoft in 1986, Amazon in 1997, Google in 2004, and Facebook in 2012.
Real-World GAFAM Use Example
Big tech companies include Alphabet, Apple, Meta, Amazon, and Microsoft.
Many investors feel that if these stocks perform well, the industry will, too. These stocks form a technology index. Early in 2020, the Nasdaq 100 index rose. Also rising: GAFAM stocks. Meta peaked in late January 2020 and fell first. Other GAFAM equities and the Nasdaq 100 rose.
Apple peaked on February 12, and Microsoft on February 10. February 19 was Nasdaq’s top. Thus, three of the five GAFAM equities fell when the Nasdaq crested. Alphabet and Amazon peaked on the same day as the Nasdaq (at closing prices).
Even if the Nasdaq 100 was climbing, GAFAM stocks may have warned investors that the technology sector was declining. GAFAM stocks are not necessarily a good sign of sector performance.
Conclusion
- American tech stocks GAFAM include Google (Alphabet), Apple, Facebook (Meta), Amazon, and Microsoft.
- FAANG stocks are similar, except Netflix substitutes Microsoft.
- Since Netflix is a consumer services and media firm, GAFAM favors technology companies above FAANG.
