While the FAANG stocks—Facebook Inc. (FB), Apple Inc. (AAPL), Amazon.com Inc. (AMZN), Netflix Inc. (NFLX) and Alphabet Inc. (GOOG)—look well positioned for growth in 2018, one team of analysts on the Street warns on risks facing the tech giants in the New Year (See also: GOP Tax Plan Could Save Tech's Big 3 $4.5B: Cowen.)

In a research note Monday, Morgan Stanley analysts wrote that while they remain fundamentally bullish on the FAANG stocks next year, due to their “substantial competitive moats,” there are “macro factors” which “raise some yellow flags.”

Large Caps at Risk

The brokerage firm noted that “large cap leaders in bull markets do not typically sustain outperformance from one year to the next.” Secondly, the group’s outperformance over value could fade, said Morgan Stanley’s Brian Nowak and Katy Huberty.

Morgan Stanley reiterated overweight ratings on all five FAANG stocks, indicating that “fundamental drivers for these stocks remain intact.” The stocks, up 49.1%, 55.6%, 55.9%, 50.4% and 34.9%, respectively, year-to-date (YTD), could see returns moderate from a strong 2017 however, as analysts “question whether growth over value can continue to be as meaningful a driver of returns.”

Too Big to Flail?

The analysts noted that the five have added $261 billion, $157 billion, $204 billion, $28 billion and $204 billion to their market capitalizations, respectively, and have done a large share in boosting the S&P 500 up about 19% in 2017.

Morgan Stanley wrote that this has been the biggest bull run ever for growth stocks versus value, writing that “the US market is in a ten-year growth over value run.”

“This is the longest in our data set going back to 1970,” wrote the analysts, suggesting that while the FAANGs are market-share leaders and disrupters in their markets, they are too large not to feel an impact from a potential U.S. consumer recession next year. (See also: Original FANGs Will Soar On 'Very Healthy' Growth: GBH Insights.)

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