3 Incredible FAANG Stocks You Might Want to Add to Your Portfolio in July

It’s been a while since the term “FAANG stocks” has attracted much attention from investors, mainly because these stocks are no longer the hottest stocks they once were. The “Magnificent Seven” have become the hottest group on the market.

The fact is, all five FAANG stocks are still incredible investments, and three of them are standout prospects that you’ll want to consider adding to your portfolio sooner rather than later.

1. Amazon

Most investors know this Amazon (Amazon -1.21%) has been (literally) the most profitable stock on the market over the past three decades; shares are up more than 260,000% since their IPO in 1997. However, most investors also understand that the e-commerce giant’s days of peak growth are over. It’s simply too big now to continue growing at its historical pace.

That doesn’t mean its future isn’t bright, though. It’s just different in a few interesting ways.

One of those methods is a relatively new focus on profitability. While the company has always been more interested in expanding its footprint than making a profit, in recent years it has closed and written off warehouses that couldn’t operate as profitably as needed. It is streamlining all of its operations to cut costs.

And it’s working! While its first-quarter revenue grew 13% year-over-year, its operating income more than tripled. Notably, its international e-commerce business went from a regular loss to an operating profit of $900 million. That’s the best result for the segment since early 2021, when the COVID-19 pandemic was in full swing.

Amazon Web Services, Amazon’s cloud computing arm, is also firing on all cylinders, bouncing back from the surge in operating expenses seen in late 2022 and 2023. Its first-quarter operating income of $9.4 billion is a record high and continues to improve. Expect more of the same. Mordor Intelligence estimates that the cloud market will grow at a compound annual rate of more than 16% through 2029.

Amazon’s newest business is also booming: advertising. Third-party sellers on Amazon.com have spent more than $11.8 billion to advertise their products on the site, up 24 percent from the previous year.

Amazon shares are already up more than 130% since the beginning of last year, hitting new record highs last week. Given its near- and long-term earnings growth, the FAANG stock still has upside potential ahead.

2. Netflix

It would be easy to assume the worst for the streaming giant. Netflix (NFLX 0.43%). Suspiciously, after a sharp slowdown in its customer growth, the company will no longer disclose its subscriber numbers starting next year. The streaming market itself is also facing a saturation headwind, forcing its leading companies to partner with peers and competitors to create more marketable offerings. The cable giant Comcast recently unveiled a cable TV bundle that included Netflix and Apple TV, for example, while Walt Disney And Discovery of Warner Bros. are combining Disney+, Max and Hulu into a discounted bundle that will launch this summer.

But just because the industry is booming doesn’t mean Netflix is ​​doomed to disappear. There are several key factors working in its favor that could (and should) help the stock continue its current rally. One of them is the company’s position in the streaming market.

It’s not just Netflix’s original name that spawned all the others. Netflix also remains the most popular and “stickiest” streaming platform. Nearly 270 million households pay for its content…far more than any of its competitors. At the same time, streaming market research firm Antenna reports that Netflix’s customer churn rate is just 2%, compared to more than 4% for Disney+ and more than 6% for Max, for comparison. For most American households that pay for multiple streaming services, the “Netflix first, then others” mindset still prevails. Habits are powerful.

The other factor working in Netflix’s favor is the rise of ad-supported streaming services. While only 40 million of its 270 million subscribers (roughly 15%) pay a lower monthly price in exchange for watching the occasional TV ad, it’s an option that will keep its service much more marketable for much longer than it otherwise would have. Market research firm Global Market Insight estimates that the ad-supported streaming market is expected to grow at an annualized rate of more than 8% through 2032.

3. Apple

Last but not least, add Apple (AAPL 0.58%) to your list of FAANG stocks to consider buying before the end of July.

It’s not necessarily a stock that’s worth buying right now. While the stock has been a staple since the iPhone’s debut in 2007, slowing iPhone sales (which account for about half of Apple’s revenue) have raised concerns about its future growth.

Yet there is already a formidable catalyst for growth: artificial intelligence.

While the company has fallen behind, it is quickly catching up. Last month, Apple unveiled several different AI features for its smartphones, tablets, and computers that will make its products even more powerful (particularly when it comes to generative AI). As Oppenheimer analyst Martin Yang writes, “the introduction of Apple Intelligence will position the company as the leader in consumer AI experiences.”

But it’s not just consumer-facing AI applications that are so promising. The company is also working on technologies that most consumers will never see in action with their own eyes. For example, it’s working on developing its own chips for use in AI data centers. NvidiaThe dominance of this market is not in immediate danger, The Wall Street Journal It looks like these chips could be based on a completely different type of artificial intelligence, called inference, rather than the training-oriented architecture that is common today.

It remains to be seen exactly what the future of Apple’s AI will look like. But Apple has a long history of success. Given that Precedence Research predicts that the global AI market will grow by an average of 19% through 2032, there’s no doubt that the company will capture at least its fair share of the market’s expansion.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Brumley holds positions at Warner Bros. Discovery. The Motley Fool holds positions at and recommends Amazon, Apple, Netflix, Nvidia, Walt Disney, and Warner Bros. Discovery. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.