Tech analyst predicts companies that will emerge as winners from a major market shift

Loup Ventures founder and managing partner, Gene Munster believes that a major market shift will soon happen for big tech with Apple, Amazon, and Google emerging as the winners.

The long-time tech analyst expects FAANG which includes Facebook, Apple, Amazon, Netflix, and Google, stocks to collectively fail as they did in most of 2020.

"There's going to be a fracturing of the performance within FAANG," Munster said on Tuesday. "Think of that group of haves being Apple, Amazon, and Google, and the have nots being Netflix and Facebook."

The tech analyst links the FAANG division to each company’s individual ability to adapt to the coronavirus, as well as evolve and thrive in a post-pandemic world. “The companies that are the haves are going to be involved in much bigger businesses,” Munster said.

 Munster has more hopes on Apple’s prospects, especially its innovation in the health and wellness space. He speculates that the newer Apple watches and Airpods designs will support more health and wellness services, and attract more customers.

“It’s very simple. Cash is king, and that will ultimately will be driven even higher with wearables,” Munster said. “This company should earn close to $6 [a share] in earnings in just a couple of years. Put a 35 x multiple on that, and you have a $200 stock.”

He also recommends that now is a good time to consider buying shares, especially Apple shares. Last month, Apple had a 4-for-1 stock split, and its stock has soared 52% so far this year. However, the company is still off 19% from its all-time high.

For Amazon, Munster believes the e-commerce giant could see long-term benefits from its logistics unit during the pandemic as more people embrace online shopping and delivery. While Google can capitalize on its innovative play independent of coronavirus.

“Think about what’s going on with Verily around health and wellness—also what they’re doing with Waymo around autonomous transportation, said Munster. “These types of businesses, I think, are ultimately going to increase Google’s multiple in the months ahead.”

Munster rates the other FAANG stocks, Facebook and Netflix, as bearish. He sees little or no innovation in the two companies as they are possibly “going to be doing the same things in one to two years as they did in the last.”

“This won’t satisfy investors’ need for bigger and new addressable markets and we think the multiples on those stories will start to be weighted down in the months and quarters ahead,” he said.