- CNBC's Jim Cramer said on Wednesday that some of the world's largest technology companies will have to adapt to changing market conditions.
- "It's time to acknowledge that the FAANG names have become very important," he said.
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CNBC's Jim Cramer said on Wednesday that some of the world's largest technology companies will have to adapt to changing market conditions.
“It's time to realize that the FAANG names have gotten too big. Can they change something? Sure, but they really need to change the way they work,” he said, referring to his short for Meta. , Amazon, Apple, Netflix. and the parent Google alphabet.
Cramer has previously said financial stocks could outperform tech stocks to lead emerging markets in the current high interest rate environment. Banks benefit from higher interest rates because they can earn more from loans.
Meanwhile, FAANG's fast-growing tech companies are being penalized with higher interest rates because their shares trade in hopes of higher returns in the future, a risk investors tend to be reluctant to take in a volatile economy.
Cramer's comments follow a string of disappointing results from tech giants Alphabet, which fell short of third-quarter revenue and earnings guidance on Tuesday, while Microsoft issued weak quarterly guidance that weighed on its stock.
Meta Platforms reported a large third-quarter earnings loss after Wednesday's close, sending its stock down more than 18% after hours.
Netflix is doing better than its tech counterparts, which reported lower third-quarter numbers on Oct. 18 as well as strong subscriber growth. The company also announced plans to combat password disclosure and introduce a new layer of advertising.
Cramer said the streaming giant's plans for the latest venture illustrate the kind of innovation FAANG companies will need to reverse the downward spiral.
“Forget about being a leader: big [tech] stocks are now followers in the post-Covid era when we find out that their earnings have been inflated by the pandemic much more than we knew,” he said. He declared
Amazon will release third quarter results on Thursday.
Disclaimer: The Cramer Charitable Foundation owns shares in Alphabet, Apple, Amazon, Meta, and Netflix.
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