The stock market’s recovery after the market crashed in March of 2020 was led by the FAANG companies. During the height of the Pandemic, consumers stayed home and spent hours online instead of going out and shopping at big-box retailers.

Many people argue that Microsoft should be included in the group because of its cult following. In 2020, the five largest stocks in the overall market, Apple, Microsoft, Amazon, Meta andTesla contributed 37% of the market’s returns. The research firm used the U.S. Large-Mid cap index as a proxy.

The FAANG stocks are no longer what they used to be. According to data from Morningstar Direct, Apple, Microsoft, Amazon, and Alphabet Class A contributed just 8% of the market returns in 2021. Despite a selloff in the stock market triggered by investors’ reaction to the Federal Reserve raising interest rates, the tech-laden Nasdaq is down more than 20% for the year. The recent tech earnings didn’t give investors much to celebrate.

“We’re going back to pre-pandemic growth levels,” says J.R. It’s a huge adjustment.

You need to know what to know about the popular FAANG stocks.

What happened to the FAANG shares?

Eric Diton, president and managing director of The Wealth Alliance, says that Amazon is a great business because people all over the world want to stay home for their health and safety. Many Americans have little to do but surf the internet, and that’s a good thing for the company that owns YouTube, Facebook and other internet companies. The future growth expectations of the FAANG stocks went crazy.

Diton says that trees don’t grow to the sky. Now, these companies are faced with comparisons to their earlier earnings, and those numbers are difficult for them to compete with as we return to normal and head back to stores, schools and offices.

In the first quarter of the year, the company reported a loss of 200,000 subscribers, marking the first decline in paid users in more than a decade. Amazon reported slowing growth and rising costs.

In February, Meta’s stock plummeted 26% in a single day, which was the biggest one-day value wipeout ever for a US company.

FAANG stocks are not the only ones suffering. In May, the Federal Reserve hiked interest rates by a half percentage point, the biggest hike in more than two decades, after increasing the rate by a quarter percentage point in April due to inflation that’s near a 40-year high. The rate hikes are used to battle rising prices by making it more difficult for businesses and consumers to borrow money, which in turn can hurt the prices of financial assets like stocks.

“Until the Federal Reserve changes its policy, investors just need to remain cautious overall,” he says.

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Do the FAANG stocks still fit in your portfolio?

Despite the fact that FAANG has caught on, you don’t want to lump all these companies together, according to David Sekera, the chief U.S. market strategist.

They’re completely different companies with different valuations and business principles. Apple’s stock is valued at $130, but the stock is currently trading at $140.

“While the company has certainly performed well over time, we do think that the market is over-extrapolating the amount of growth that it’s seen over the past couple of years too far into the future,” she says. The long-term earnings stream is something we think the market is too optimistic about.

The market is overly pessimistic about Meta. Meta’s estimated value is $384 per share, but the stock is trading around $192.

Amazon, Microsoft, and Alphabet are all overvalued according to the research company.

Should these tech giants’ stocks be in your portfolio?

Diton agrees. They’re an important part of the economy.

They take up a higher allocation in your portfolio if you don’t want them to be overweight. Financial advisors recommend that you change your investment portfolio. Rebalancing is an investing strategy in which investors sell investments that have grown in value and replenish investments that have fallen in value to get their portfolio back to holding their target weights. This will allow you to sell high and buy low, and ensure your portfolio remains as diversified and balanced as it was when you started. While the percentage of your portfolio that FAANG stocks should make up will differ for investors, as it depends on your risk tolerance, time horizon and goals, Diton says there’s no reason to own more than 10% of your stock allocation

If you own a major index like the S&P 500, you already own a lot of FAANG stocks. Microsoft and FAANG stocks make up 21% of the S&P 500, according to S&P. If it makes sense for your financial situation, you want to make sure that your portfolio has a mix of small-, mid-cap and international stocks.

While most long-term investors can get the tech exposure they need through funds, if you want to own individual stocks, there are some names in the tech sector to keep an eye on. The software company Palantir Technologies, the cybersecurity company Okta, Intel and VMware are all companies that are believed to be cheap. One of the most undervalued companies in the large-cap tech sector isSalesforce.

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