Facebook and Google need to capture more of the ad market to justify valuations

In the Fidelity Insight of the week, Business Insider editor-at-large Sara Silverstein sits down with Matt Fruhan, a portfolio manager at the firm, about where there are opportunities in equities. He says that his funds have started tilting a little more towards value in the last couple years. On a three- to five-year basis, he says he looks at earnings growth and yield, relative to valuations. Fruhan notes that growth has picked up in the last few years, with tech leading the way. He says that quantitative easing has led to an abundance of capital in the market, something he doesn't see as particularly sustainable.

Fruhan shares his thoughts on FANG stocks, which he says are loved by consumers and are offering a great deal of growth. He notes that companies like Facebook and Google have done a great job penetrating the online ad market and taken a lot of shares. Fruhan then says that in order for the companies to hit current estimates, they're going to have to gain even more advertising market share. He thinks that until we see slower growth or different capital costs, it's going to be tough to change how the market values these mega-cap tech companies.