The bigger they are, the harder they fall. We've seen the old adage play out in the stock market this year. Some of the worst-performing stocks are tech giants.
In particular, most of the so-called FAANG stocks (which isn't really the best acronym anymore) have plunged much more than the S&P 500. Some of these high-profile stocks appear to be in stronger positions than others after their steep declines. Here are the safest and the riskiest FAANG stocks to buy right now.
The safest
There's a good argument to be made that Apple (AAPL -0.57%) ranks as the safest among the FAANG stocks. After all, it's the only member of the group that's outperforming the S&P 500 this year -- albeit by only a tiny margin.
Apple's business continues to hum along, largely unaffected by the macroeconomic uncertainty. The company reported solid revenue and earnings growth in its fiscal 2022 fourth-quarter results last month. Its services business enjoyed a record quarter.
This doesn't mean that Apple couldn't stumble, though. Reasons to be cautious about the stock over the near term include the strong U.S. dollar (because the company makes a big chunk of its revenue in international markets) and the possibility of a recession. But Apple probably deserves the nod as the safest FAANG stock, for now.
However, I think that a strong case could also be made in favor of either Alphabet (GOOG 0.37%) (GOOGL 0.35%) or Amazon (AMZN -1.14%) as the safest FAANG stock. The arguments for each of these tech giants are basically the same.
First, both stocks are cheaper than they've been in quite a while. Alphabet stock remains near what can rightfully be called a once-in-a-decade buying opportunity. The same is true for Amazon, with the current sell-off being the greatest for the stock since the Great Recession of late 2007 through mid-2009.
Second, Alphabet's and Amazon's financial positions are rock solid. Their growth is slowing right now, but both companies will be able to easily weather the storm.
Third, the headwinds for Alphabet and Amazon are only temporary, while their long-term prospects are still very good. Alphabet's dominance in search won't disappear. Amazon's e-commerce business will rebound as economic conditions improve. Both should enjoy exceptional growth with their cloud hosting units.
The riskiest
That leaves Meta Platforms (META 1.54%) and Netflix (NFLX -0.51%) to battle head-to-head as the riskiest FAANG stock. There's a clear "winner" in this category, in my view.
Meta has fallen the most this year, by far, of the five FAANG stocks, and for good reason. The company's advertising business on Facebook and its other social media apps are struggling. At the same time, Meta is spending massively on developing its metaverse platform.
If Meta wasn't making such a huge bet on the metaverse, I don't think it would be the riskiest FAANG stock. On the other hand, if this bet pays off, Meta just might become the biggest of the group over the long term. Such gigantic gambles dramatically increase risk.
What about Netflix? It was the worst-performing FAANG stock for much of the year. However, the company's turnaround has become evident in the second half of 2022.
Probably the biggest factor behind this reversal is that Netflix attracted more subscribers with new content. The latest season of Stranger Things was a huge hit. So was Monster: The Jeffrey Dahmer Story, among others. Netflix's new ad-supported tier could provide a further boost.
Still, Netflix faces intense competition in the streaming market. It doesn't enjoy a moat like Apple, Alphabet, and Amazon do. Meta is riskier, but Netflix isn't totally out of the woods just yet.
