The FAAMG stock complex [Facebook, Apple, Amazon, Microsoft and Google] has been one of the best investments of the past five years amid the incredible advances in technology that has powered massive bottom line gains for the biggest of the biggest in tech.
But the heady quarterly earnings gains for the likes of Facebook, Apple, Amazon, Microsoft and Google that investors have come to know and love may be at risk of a sharp cool-down if the Biden administration's various tax hikes kicks in next year, Goldman Sachs chief U.S. equity strategist David Kostin warns.
"If the Biden corporate tax plan were fully enacted, FAAMG 2022 estimated earnings would decrease by roughly 9% relative to consensus expectations," Kostin says. By comparison, the S&P 500's earnings would be reduced by 8% under the new corporate tax rate.
The Biden administration is seeking to lift the corporate tax rate to 28% from the Trump-era's 21%.
He is also readying to increase the capital gains tax on the wealthiest Americans to 43.4%, including a surtax to help fund infrastructure investments. The current capital gains tax stands at a top rate of 23.8%, which has been in place since Jan. 1, 2013.