Google Shines, But Other FAANG Stocks Underperformed in 2021
FAANG stocks have been struggling to extend the upside momentum into 2021 as four out of five FAANG components are still struggling to generate positive returns so far this year. Apple (NASDAQ: AAPL) is down 2% year to date while Amazon (NASDAQ: AMZN) and Facebook (NASDAQ: FB) are also in the red since the beginning of this year.
Alphabet (NASDAQ: GOOG), which was the laggard among the FAANG group, has generated strong share price growth in the first two months of this year.
Shares of Google are up 19% year to date, extending the nine months gains to over 50%. The rally is supported by the fact that global economic reopening would enhance digital ads from the struggling airline and tourism industry. Several other hardest-hit sectors are likely to perform well in 2021, which would help in boosting online ad revenue.
Higher stock price targets from market analysts also contributed to the Google stock price upside. Jefferies has set a Buy rating and raised the price target to $2,400, representing a significant upside from the current $2000 level. The firm cites ad strength in retail and YouTube. JPMorgan and Morgan Stanley have provided a $2200 price target for the advertising platform amid a recovery in ads revenue.
The company’s latest financial results also hint rebound in ad revenues. Its December quarter revenues soared 23.5% to $56.9 billion while the operating income surged 69% to $15.65 billion.
Ruth Porat, CFO of Google and Alphabet, said:
Our strong fourth-quarter performance, with revenues of $56.9 billion, was driven by Search and YouTube, as consumer and business activity recovered from earlier in the year. Google Cloud revenues were $13.1 billion for 2020, with significant ongoing momentum, and we remain focused on delivering value across the growth opportunities we see.”
The company expects high double-digit revenue growth for the first quarter and the full year, which many analysts believe would help in sustaining the momentum throughout the year.