Tech stock selling intensified this week as market-based inflation measures hit the highest levels in 10 years.
The Nasdaq Composite, which has fallen some 5.2% from its April 26 peak, is the price for another 280 point slump Tuesday, paced by extended pullbacks for benchmark tech heavyweights Apple (AAPL) - Get Report, Facebook (FB,) - Get Report and Microsoft (MSFT) - Get Report.
Tech investors appear to be taking no chances and are dumping stocks that are most sensitive to interest rate increases based on the fact that they generate earnings and cash flows farther off in the future.
"When our booming economy begins to cool, the tech stocks will come roaring back, the founder of TheStreet Jim Cramer told his Mad Money viewers Wednesday. That's why it's always prudent to keep a diversified portfolio and never give up on FAANG," TheStreet's Scott Rutt wrote in his Mad Money recap.
So, hold onto FAANG stocks.
"Yes, it's true, things aren't looking good for the FAANG stocks so far this year. Shares of Amazon are up just 1%, while Apple remains down 3% for the year," Cramer said. But he also added that he's not giving up on FAANG and offered up reasons why it would be a mistake to sell.
"First, there is no real FAANG, these are just five separate entities, all with winning pedigrees. Second, while FAANG may be lower in 2021, over the long term, it's no contest. Over the past 10 years, Apple has delivered 934% gains and Amazon is up 1,559%," he wrote. "Third, boom times like now are great, but they never last. The economy will eventually cool and the industrials will fall. Meanwhile, FAANG is built to last. All of these companies have the scale and resources to reinvent themselves time and again."
For more in-depth coverage of the technology and FAANG sectors including trading recommendations and investment strategies, follow the experts on Real Money.
Here is a list of the technology and FAANG stocks to watch and their performance by percentage change over the past five days through the close of trading on Friday, May 14:
Microsoft | -1.51% 5-Day
The Pentagon granted a $10 billion, 10-year contract to Microsoft (MSFT) - Get Report in 2019 for the Joint Enterprise Defense Infrastructure, or JEDI, contract. The program would consolidate the Pentagon’s disparate data systems and enhance its artificial intelligence capabilities.
Amazon quickly filed suit over the decision. In April, a federal judge turned down the Defense Department’s motion to dismiss much of Amazon's case. After that, the department said it would review the project. The Pentagon may drop the controversial cloud-computing program that led to a lawsuit from Amazon.com (AMZN) - Get Report, according to reports from The Wall Street Journal and others.
The Street Quant Ratings rates Microsoft as a Buy with a rating score of A.
Bumble | -15.53% 5-Day
Shares of Bumble (BMBL) - Get Report fell on Thursday, taking the stock of the dating app below its February initial public offering price. The stock is under pressure after getting a cautious outlook.
Bumble at last check dropped more than 12% to $41.45, even after the Austin company topped analysts' first-quarter expectations and provided upbeat guidance. Bumble debuted in February, selling 50 million shares at $43, raising $2.15 billion. The stock was down more than 40% since the IPO.
"This is a company that doesn't fit my profile, but I want to buy it. It is a very good company. But, Bumble's not going to make any actual reasonable profit that you see Match (MTCH) - Get Report making," said the founder of TheStreet Jim Cramer.
Peloton Interactive | +13.58% 5-Day
Peloton (PTON) - Get Report stocks rose Friday even though it received a downgrade from Bank of America after the high-tech exercise-bike maker announced a recall of its Tread and Tread+ treadmills following the death of a child. Several analysts also cut their price targets on Peloton due to the recall.
The recall sparked obvious concerns from investors, ranging from the impact on future sales to the expenses related to such a logistical nightmare. However, Peloton this past week reported better-than-expected results in its fiscal third quarter as connected-fitness revenue surged in a rally, but said it expects fiscal fourth-quarter sales to take a $165 million hit due to the treadmill recall.
TheStreet Quant Ratings rates Peloton as a Sell with a rating score of D+.
Zoom Video Communications | +3.79% 5-Day
Zoom shares fell as much as 8% in the last two trading sessions, but the stock rebounded nicely Friday, climbing 5.6% to $306.46 Friday afternoon.
Zoom shares are down nearly 50% from their 52-week high as the stock has steadily declined since October. Before that, the work-from-home movement that was made necessary by the global coronavirus pandemic had boosted shares significantly.
TheStreet Quant Ratings rates Zoom Video Communications as a Sell with a rating score of D+.
PayPal | -2.85% 5-Day
Happy Returns is a drop-off service that enables online shoppers to return items without having to box and ship the items themselves. The company's network has more than 2,600 dropoff locations spread across every state. PayPal expects the deal to close in this quarter, according to MarketWatch.
TheStreet Quant Ratings rates PayPal as a Buy with a rating score of B+.
Square | -11.12% 5-Day
The first tool is Snippets API for Square Online, which enables developers to create plugins that help sellers create engaging online experiences. Square also announced the general availability of Web Payments SDK and Loyalty API, two new tools that help to optimize and extend the benefits of online selling.
TheStreet Quant Ratings rates Square as a Hold with a rating score of C.
Facebook | -0.83% 5-Day
Silvergate Capital (SI) - Get Report shares surged Thursday after Diem Association, a digital-currency group backed by Facebook (FB) - Get Report, tapped the financial-services company to issue the Diem USD stablecoin.
Facebook shares fell Monday after Citigroup analyst Jason Bazinet downgraded the tech titans to neutral from buy. The company depends on advertising for almost all of its revenue, and Bazinet sees ad-spending growth decelerating.
Facebook reported strong first-quarter earnings, with net income of $9.5 billion, or $3.30 a share, compared with $4.9 billion, or $1.71, a year earlier.
TheStreet Quant Ratings rates Facebook as a Buy with a rating score of A-.
Apple | -2.21% 5-Day
Apple (AAPL) - Get Report said Tuesday that its App Store last year stopped more than $1.5 billion in potentially fraudulent transactions. The company said that in 2020 nearly 1 million problematic new apps, and an additional nearly 1 million app updates, were rejected or removed for a range of reasons.
Apple supplier Lumentum Holdings (LITE) - Get Report posted weaker-than-expected third-quarter revenues after it deferred some sales linked to 5G deployment delays in China. Lumentum supplies laser components for Apple iPhone's facial recognition system.
Apple shares were marked 1.26% lower at $124.32 each, extending their 2021 slump to 6.3%.
TheStreet Quant Ratings rates Apple as a Buy with a rating score of A.
Amazon | -2.13% 5-Day
Amazon (AMZN) - Get Report scored a legal victory after The General Court, the European Union's second-highest, ruled that the tech and internet-retailing giant did not have to pay about $303 million in back taxes to Luxembourg.
Shares of the Seattle company at the last check were off 1.1% at $3,188.
TheStreet Quant Ratings rates Amazon as a Buy with a rating score of B.
Netflix | -2.24% 5-Day
Shares of Roku Inc. (ROKU) - Get Report were rising Thursday after the company announced that it is adding to its streaming service by becoming a content producer like Netflix (NFLX) - Get Report and other services it hosts on its platform.
Cramer said any of the FAANG stocks like Netflix that are down for the year are very compelling. "What I don't get is the endless obituary for FAANG stocks, they can't all go up at once for heaven's sake," he said.
TheStreet Quant Ratings rates Netflix as a Buy with a rating score of B.
Alphabet | -3.17% 5-Day
Alphabet recently traded at $2,275.05, down 0.73%. But last month, multiple analysts raised their price targets for Alphabet after the Mountain View, Calif., advertising and tech giant posted a blowout earnings report for the first quarter.
The company posted a profit of $17.93 billion, or $26.29 a share, compared with $6.84 billion, or $9.87 a share, in the year-earlier quarter.
TheStreet Quant Ratings rates Alphabet as a Buy with a rating score of A.
Salesforce, Microsoft, Facebook, Apple, Amazon, and Alphabet are holdings in Jim Cramer’s Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells these stocks? Learn more now.