DEFINITION of 'GAFAM Stocks'

GAFAM is an acronym for the five most popular U.S. tech stocks: Google, Apple, Facebook, Amazon and Microsoft. The term came into existence on the lines of the FAANG stocks acronym which collectively indicates top U.S. technology stocks namely Facebook, Apple, Amazon, Netflix and Google. (See also, BATX Stocks.)

BREAKING DOWN 'GAFAM Stocks'

While a lot of market indexes exist to collectively refer and track the developments of a particular industry sector, there are a handful of sector companies that lead the pack with the maximum influence on the sectoral movement. Such terms, FAANG, GAFAM or BATX, find increasing use in referring to the developments linked to such heavyweight, popular influencers.

GAFAM is made up of Alphabet Inc.’s Google (GOOGL), Apple Inc. (AAPL), Facebook Inc. (FB), Amazon.com Inc. (AMZN), and Microsoft Corp. (MSFT). All the five companies are listed on the NASDAQ stock exchange.

GAFAM versus FAANG

Among the commonly used FAANG group of companies, Netflix is the only one belonging to the “consumer services” sector and “consumer electronics/video chains” sub-sector owing to its media content business, while the other four belong to the “technology” sector. The term GAFAM was coined to replace Netflix with Microsoft in the list, making it a group of technology-focused companies. While Amazon is also classified under “consumer services” sector and “satalog/specialty distribution” subsector, it has its cloud hosting business, Amazon Web Services (AWS), that make it a significant contributor to the technology space. Essentially, GAFAM represents the U.S.'s technology leaders whose products span mobile and desktop systems, hosting services, online operations, and software products.

The five GAFAM companies have a joint market capitalization of around $4.1 trillion as of July 2018. Interestingly, they are also the top five companies in terms of market capitalization on the NASDAQ stock exchange. Among GAFAM stocks, the oldest company to list on the stock exchange is Apple which had its initial public offering (IPO) in 1980, followed by Microsoft in 1986, Amazon in 1997, Google in 2004, and Facebook in 2012.

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