Big Tech Stocks: What Are FAANG, MATANA & the Magnificent 7?

Meta, formerly known as Facebook, Amazon, Netflix, Apple, Alphabet, NVIDIA, and Tesla are considered some of the most renowned and popularly traded companies in the world. 

Aside from being American and belonging to the tech sector, these companies have other commonalities and even share mutual acronyms- FAANG, MATANA, and Magnificent 7. 

However, while FAANG and MATANA were popular terms in the past couple of years, more recently, some analysts and market watchers seem to have replaced them with Magnificent 7 stocks. 

So what are FAANG, MATANA, and Magnificent 7 stocks exactly, and what are the differences between each term? Here’s what you need to know:

What Does FAANG Mean?

FAANG stocks refer to 5 of the most popular tech shares in the world: Meta, formerly known as Facebook, Amazon, Apple, Netflix, and Alphabet, also known as Google. While the term is most commonly known as FAANG, before 2017, it actually did not include Apple and was called FANG until investors popularised Apple and incorporated it into the term, hence turning it into FAANG. These stocks were chosen because they created hype in the market at the time and were considered hot stocks. (Source: Investopedia)

A Short Rundown of All the FAANG Companies:

Meta

Founded in 2004, Meta (META), famously known as Facebook, is an online social media and social networking service company. Instagram, WhatsApp, and Oculus VR are among Meta's subsidiaries, and online advertising is its chief source of revenue. In October 2021, the company changed its name from Facebook to Meta to reflect its interest in the nascent Metaverse technology. However, while in 2021, Meta was among the US’ top 5 companies by market cap and had an astonishing market value of $1 trillion, as of June 2024, the company lost some of its luster, becoming the world’s 7th most valuable company at a market capitalisation of about $1.2 trillion. 

Amazon

Known as an e-commerce giant, Amazon (AMZN) was founded in 1994 by Jeff Bezos. Whereby the company currently sells retail goods and electronics, among other things, in 1994, it started as an online bookshop and has grown exponentially throughout the years to become one of the largest e-commerce retailers in the world (by revenue). As of June 2024, Amazon is the world’s 5th most valuable company with a market cap of over $1.8 trillion. 

Apple 

Famously known for its iPhones, Apple (AAPL) is a big tech company which was founded in 1976 by Steve Jobs, Ronald Wayne, and Steve Wozniak. As of June 2024, the California-based company is considered one of the world’s second most valuable companies by market capitalisation, standing at over $2.9 trillion.

Netflix

Netflix (NFLX) is a renowned online streaming service that provides subscribers with access to movies and television shows by subscription. The California-based streaming giant has been through a tumultuous year of ups and downs triggered by the increase in market competition like Disney+, Hulu, and HBO, along with inflation and ailing economic circumstances. As of June 2024, the streaming giant’s market capitalisation stands at about $275.2 billion. 

Google 

One of the world’s most famous tech companies with the most used search engine, Google, otherwise known as Alphabet (GOOG), was founded in 1998 by Sergey Bring and Larry Page and has grown exponentially throughout the years. While the company is most famous for its search engine, its services are multifaceted as it also offers online advertising, computer software, e-commerce, and quantum computing, among other things. As of June 2024, Alphabet is considered the world’s 4th largest company by market capitalisation of about $2.1 trillion.

Who Came Up with the Term FANG Stocks?

While the term was undoubtedly popularised by Jim Cramer, a host on the CNBC TV show, ‘Mad Money,’ which covers interviews with companies’ executives to help people understand the market, Cramer credits this term’s coining to someone else. According to sources, it was Bob Lang, a trader, author, and co-portfolio manager of TheStreet's Action Alerts PLUS and Trifecta Stocks who coined this term in 2013.

Why Are FAANG Stocks Important?

There is no question that FAANG stocks dominate both the US as well as the global markets since they provide products and services that are used worldwide. These companies are also famous for their remarkable growth in recent years and as of 2024, their market capitalisation combined is above $8.4 trillion, which exceeds both Germany’s and Japan’s GDP and surpasses Russia’s and Australia’s GDP combined. Thus, it might not be surprising to know that these companies' shares can have a huge impact on the market as a whole and are, hence, quite important.

Why Is Microsoft Not a FAANG Company?

With Microsoft being one of the world’s biggest tech companies with an impressive market capitalisation of over $3 Trillion (as of June 2024), it might be surprising to know that Microsoft isn't included in the FAANG companies. Nonetheless, its exclusion from the FAANG may be attributed to the fact that when the term FAANG emerged, it was used mainly to refer to relatively newer or more hyped companies in the field, and Microsoft was not among any of the former back then. Nonetheless, this company is included in newer terms called MATANA and Magnificent 7 stocks, which many analysts believe is the new FAANG. 

What Does MATANA Stand For?

Essentially, MATANA and FAANG share similar companies with the extraction of Meta and Netflix, and the addition of Microsoft, Tesla, and NVIDIA. Accordingly, the acronym MATANA refers to Microsoft, Apple, Tesla, Alphabet, NVIDIA, and Amazon which are considered prominent American tech companies. This term was highly popularised in the past year and analysts are even suggesting that it should replace FAANG. The term MATANA was introduced by Constellation Research Principal Analyst & Founder Ray Wang in 2022 in an interview.

A Short Rundown of All the MATANA Companies

As mentioned above, MATANA and FAANG share similar companies such as Apple, Alphabet, and Amazon. However, whereas FAANG includes Netflix and Meta, MATANA replaced those with Microsoft, Tesla, and NVIDIA. The replacement came about in light of the fact that Meta, according to Wang, needed to delve into something besides being ad-reliant, and the obscurity surrounding where the company was heading next stood behind his decision to replace it. As for Netflix, Wang believes that since the streaming giant’s business model relies on subscriptions, it might not grow substantially in the future, which is why he excluded it. 

Furthermore, the choice to replace the aforementioned companies with Microsoft, NVIDIA, and Tesla is due to many reasons, including Microsoft’s (MSFT) involvement in the Metaverse, gaming, and cloud computing, according to Wang. In addition, chip-giant NVIDIA (NVDA) was added due to its contribution to the AI sphere and also the Metaverse. Whereas Tesla’s (TSLA) addition can be traced back to its ostensible dominance in the EV sector. 

Both Microsoft and NVIDIA were deemed some of COVID-19’s biggest winners due to increased at-home usage, and while these two companies were indefinitely harmed by the higher interest rates and inflation throughout 2022. This, in turn, caused the two tech giants to freeze their hiring process or lay off workers. Tesla, too, has suffered throughout the year due to renewed COVID restrictions which halted production in its Shanghai facilities and affected its growth and Tesla’s stock price . Nonetheless, all of these companies may still be considered some of the biggest names in the market with a possibly prosperous future ahead of them. 

What Are the Magnificent Seven Stocks?

The Magnificent 7, or “Mag 7,”  is a relatively newer term used to describe 7 of the economy’s most leading stocks and these include Meta, Apple, Netflix, Amazon, Alphabet, NVIDIA, and Microsoft. 

Interestingly, the term was derived from a 1960 American Western film, “The Magnificent Seven.” 

Trading the FAANG, MATANA and Magnificent 7 with Plus500

Traders wishing to gain exposure to the price movements of FAANG, MATANA, and Magnificent 7 stocks can either do so by trading Contracts for Difference (CFDs) on the individual stocks or by trading CFDs on indices that track these stocks’ collective performance like Plus500’s Magnificent 7 Index (BMAGSI) CFDs. 

Trading CFDs can provide access to rising and falling stock prices without granting the trader ownership of them. In addition, CFDs are leveraged, meaning that both gains and losses can be amplified. 

To learn more about CFD trading, read our article titled “What Is CFD Trading.”

Trading Magnificent 7 Share CFDs in Extended Hours

Plus500 also offers extended trading before the market opens and after it closes on Magnificent 7 share CFDs, allowing traders to capture market movements beyond standard trading hours. 

This enables traders to make the best out of key market events, news, and updates without having to wait for the market to open. To learn more about extended-hours trading, you can read our article titled “Extended Hours Trading Guide: Pre-Market & After-Hours.”

The Future of FAANG Stocks, MATANA Stocks & Magnificent 7 Stocks

There is one thing we can be sure of when it comes to the market and the economy: they can be volatile, and many factors can affect their growth. Therefore, while some of the companies mentioned above may have been suffering with the overall economy lately, whether or not this downtrend continues or for how long is yet to be unclear. Moreover, since past performance is no guarantee of future growth and since there are many factors like wars, rate hikes, recession, and inflation that can come into play, the future of FAANG, MATANA, and Magnificent 7 may be obscure.  As of 2024, many of these stocks have shown signs of strength, but whether this strength will be able to be sustained is yet to be seen.