7 Next FAANG Stocks to Buy Now

The famous FAANG stocks (Meta, Amazon, Apple, Netflix and Alphabet) are among the largest and most successful companies in the world today. They are also some of the most incredible growth stories ever to emerge in the history of American capitalism. An investment of $1,000 in each of the FAANG stocks in 2010 or at their IPO would have returned a profit of over $65,000 by the end of the decade.

 

While the story of the FAANGs is well-known, investors are constantly on the lookout for the next potential high-growth tech stock. Although there are many technology companies that could become the next huge success story, a handful of candidates stand out as the most probable. Here are seven of the leading tech stocks that could be the next to rival the growth rates of the FAANG companies.

 

After changing its name from Square in December 2021, digital payment processing firm Block (NYSE:SQ) has attracted considerable attention from investors seeking high-growth bargains.

 

The company’s stock declined by more than 40 percent in 2021, potentially leaving it slightly undervalued.

Block stock could be a good buy for several reasons.

 

To begin with, Block will now be the primary focus of CEO Jack Dorsey. More well-known as the founder and former chief executive of Twitter, Dorsey announced late in 2021 that he would step back from the social media platform to become more involved in his payment processing business. Now that Dorsey will be working on Block full-time, the company may see higher growth and more innovation going forward.

 

Another important change that could drive Block’s stock higher is its new focus on blockchain technology. The underlying computer technology behind cryptocurrencies such as Bitcoin, blockchain is emerging as a new model for instant digital transactions. As its new name suggests, Block will be investing heavily in blockchain technology in the months and years to come.

 

Block is also expanding its product offerings into the buy-now-pay-later space. The company has made an offer to acquire Australian BNPL provider Afterpay for $29 billion in stock. Combined with Block’s existing payment infrastructure, a BNPL service would allow the company to compete with the likes of PayPal for online transactions.

 

Overall, Block seems to be positioning itself to become a dominant online payment provider. By adding blockchain technology and BNPL capabilities to its existing list of services, Block has the potential to achieve considerable growth in the coming years.

 

Despite its decline throughout 2021, Block may be a good buy going into 2022 and beyond. At present, the median 12-month analyst price forecast for Block is $300 against a current price around half that amount. Even if the stock significantly underperforms this forecast, the potential upside would give investors a solid return.

 

Sea Limited (NYSE:SE) is a Singaporean technology group that specializes in gaming, e-commerce and online payment services. Like many large tech companies, Sea’s share price was badly damaged by the 2021 selloff in high growth technology stocks. Going into 2022, the stock is down by 40 percent from its previous high.

 

Like other stocks on this list, though, Sea may be a good opportunity for longer term investors. The company’s position in the Southeast Asian market will likely allow it to grow alongside emerging economies. E-commerce is rapidly expanding in Southeast Asia, creating substantial opportunities for companies like Sea.

Sea is also moving to expand on a global scale and reduce its ties to China. Already, the company has announced a plan to pare back voting control by Chinese tech giant Tencent to a maximum of 10 percent. Per Sea’s last annual report, Tencent held 23.3 percent of voting rights in the company. This reduction in Chinese exposure and turn toward a more global view could benefit Sea as the Chinese market slows.

 

The median 12-month stock price target for Sea Limited is $402, while the stock trades under $200 per share at the time of research. Notably, even the low forecast price of $270 would present an upside of more than 35 percent.

 

Unlike many other large tech stocks, shares of data storage giant Snowflake (NYSE:SNOW) rose solidly in 2021. Even without a price rout, though, there are good reasons to believe that Snowflake could be one of the best tech stocks to own in the year ahead.

 

The company has attracted attention from some of the world’s top institutional investors, including Warren Buffett’s Berkshire Hathaway.

Because of its prominence in data warehousing, Snowflake is in a unique position to capitalize on the growth of data in other companies.

 

Many large enterprises already use Snowflake’s cloud services to store and manage their data, and the company is investing aggressively to reach an eventual goal of $10 billion in annual revenues.

 

Currently, Snowflake accounts for about 17.5 percent of the total data warehousing market. By 2028, the market for data warehousing as a service is expected to reach nearly $8 billion.

 

Due to the selloff of other tech stocks last year, Snowflake trades at a much higher multiple compared to its trailing revenues than many of the stocks on this list (107 times, to be specific).

 

This company may also have a bit less short-term upside than others, as its median target price is $397. With that said, Snowflake has serious potential as a long-term value stock and deserves a place on any investor’s radar.

 

MercadoLibre (NASDAQ:MELI) is an Argentine e-commerce platform servicing the Latin American market. With a market share of Latin American e-commerce that exceeds 30 percent, MercadoLibre is in an ideal position to capitalize on the region’s rapidly growing online economy.

 

MercadoLibre has witnessed truly explosive growth over the past year. Revenues in the first three quarters of 2021 were up 87 percent compared to the same period in 2020. Net income also rose by 120 percent.

 

Given these staggering numbers, it’s clear that MercadoLibre has successfully tapped into a lucrative and rapidly growing market largely made up of emerging economies.

Although the company has clearly been very successful, it’s impossible to separate MercadoLibre’s growth from the rise of the Latin American e-commerce sector.

 

 

The spread of internet access has opened the Latin American market, bringing in tens of millions of customers that were previously unreachable by online merchants.

 

 

Best of all, the company’s rapid growth appears to be far from over. The consensus estimate on revenues for the current quarter is $2 billion, up by slightly more than 50 percent from last year.

 

 

While many investors have chosen to invest directly in cryptocurrencies, there’s also the option of buying shares of publicly traded crypto exchanges. Coinbase (NASDAQ:COIN) is one of the largest cryptocurrency exchanges and has already positioned itself to capture market share as crypto trading continues to grow.

 

Buying stock in Coinbase is a good way to capitalize on the cryptocurrency boom without actually putting money into the digital currencies themselves. Because it lists 50 top cryptocurrencies, Coinbase is more robust than investing in any single coin. As long as the crypto market continues to grow, Coinbase should grow along with it.

Despite its potential, investors should be aware that shares in Coinbase can be quite volatile. This is because they are to some extent tied to the prices of major cryptocurrencies, especially Bitcoin. Often, a drop in the price of Bitcoin will cause shares of Coinbase to fall to a similar degree. If you can ride out these waves of volatility, though, Coinbase has significant investment potential over the long run.

 

The good news for Coinbase begins with massive growth. In its Q3 earnings call, the company reported earnings growth of 295 percent and revenue growth of 316 percent from the same quarter the previous year. While this rate of growth can’t continue indefinitely, it does show that Coinbase’s business model is extremely sound and that there is a large market for its services.

 

Thanks in part to the stock’s volatility, analyst price targets for Coinbase are unusually varied. The stock has a median target price per share of $402. The high and low targets are very far apart at $600 and $242, respectively. Based on these estimates, however, it’s clear that Coinbase likely represents an asymmetrical risk with limited downside and potentially large upside.

 

Fintech company Upstart (NASDAQ:UPST) was arguably one of the most successful stocks of 2021.

 

Based on extremely positive growth metrics and early profitability, shares of Upstart rose by more than 270 percent last year. Although it’s unlikely to replicate that feat for a second consecutive year, Upstart still shows massive potential going forward.

 

 

The AI technology behind Upstart allows it to quickly and easily evaluate the risk level of a given loan and approve or decline the applicant. With Upstart’s unique risk assessment system, applicants with lower credit scores can receive loans with lower interest rates than they would find elsewhere.

Despite being a very young company, Upstart has already shown that it can successfully disrupt the personal loan industry. The company is beginning to expand into the auto loan market, which could be extremely lucrative for it in the long run.

 

In the coming year, Upstart also plans to begin offering AI-powered mortgage loans. By expanding its proven model into the broader consumer credit market, Upstart can likely continue to see high rates of growth going forward.

 

Analyst bullishness on Upstart is strongly reflected in target price forecasts. Even the lowest analyst target stands at $160. The median target price is $287.50, and the high is $350.

 

Combined with the fact that Upstart has achieved profitability so early and is moving into large, new markets, these estimates present an extremely bullish case for the fledgling loan originator.

 

Affirm (NASDAQ:AFRM) is a fintech company focusing on buy-now-pay-later financing for online consumer purchases. In conjunction with e-commerce, BNPL has grown explosively in recent years. By 2025, the global transaction volume for this form of consumer credit is expected to reach $680 billion.

 

During the month of December, Affirm stock experienced an extremely volatile period in which sellers ultimately took control.

 

In large part, the drop in the company’s shares at the end of 2021 was a result of investor concerns over regulatory action. Due to the growth of the BNPL market, the Consumer Financial Protection Bureau announced in mid-December that it would begin an investigation of several large firms. Affirm was among the firms named in that investigation, and shares dropped by about 10 percent the same day.

At the moment, there is a strong argument to be made that shares of Affirm are oversold. While regulatory concerns are understandable, the drop in stock price that occurred in December was likely more drastic than the actual conditions warranted. This evaluation is somewhat supported by technical analysis metrics, as the relative strength index, or RSI, for Affirm is currently holding at 29.1. An RSI of 30 or lower generally indicates that a stock is oversold.

 

Although the current 12-month price targets haven’t yet taken into account December’s falloff, they do show a generally positive outlook from analysts. The median target price is set at $170. Given the regulatory circumstances surrounding Affirm, it may end up closer to the low target of $108. Even at that price, though, Affirm offers investors decent upside for their money.

 

As you can see, there are several opportunities for investors in the tech sector at the moment. While all of these stocks have at least the potential to be the next explosive growth story, it’s also important to keep in mind that high-growth stocks can be quite volatile. Higher inflation and rising interest rates in 2022 could also negatively affect the tech sector, at least in the short term. Be sure to carefully evaluate these stocks and be sure that they fit in with your investing strategy and tolerance for investment risk.

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