With a stock market sell-off in 2022, it has become crucial to buy shares in companies that are likely to grow over several years. A long-term investment strategy can protect you from economic fluctuations, such as a possible recession in 2023.
Apple (AAPL -0.34%), Nvidia (NVDA -1.51%)and Advanced micro-systems (AMD -3.23%) have each proven to be excellent growth stocks, with their stock prices growing in the triple digits over the past five years despite declines this year. As a result, shares of these companies are obvious buys, allowing you to sit back and let your money work for you indefinitely. Here’s why.
As the world’s most valuable company by market capitalization, it’s hard to argue against an investment in Apple. The company has developed a walled garden of products and services that manages to draw consumers further into its fold with a single purchase. For example, people who buy an iPhone are more likely to choose Apple again when looking for a laptop, smartwatch or tablet in the future, thanks to the effortless connectivity between its products.
The strategy has helped Apple grow amid economic headwinds this year and has boosted its stock 250% over the past five years despite falling 18.5% year-to-date. In the fourth quarter of 2022, the iPhone maker posted revenue of $90.15 billion, up 8.1% year-on-year and $1.38 billion above Wall estimates. Street. Additionally, operating profit rose 4.6% to $24.89 billion.
In a year marked by declining consumer spending, strong sales of Apple’s iPhone 14 lineup led its smartphone segment to rise 9.6% to $42.6 billion and its Mac segment by 25.3% to $11.5 billion. In fact, the success of the iPhone has seen Apple officially overtake Alphabet‘s Android for the largest smartphone market share in September, consolidating its dominance with 50% of the market in the United States
Apple is home to powerful products, with a history of quickly dominating any new market it enters. Its success with its tablet, smartwatch and Bluetooth headset versions has proven this. With reliable stock growth over the past five years and rumored plans to enter lucrative markets such as augmented/virtual reality and electric vehicles, Apple is a great stock to buy now and hold forever.
Nvidia has established itself as one of the main founders of what the graphics processing unit (GPU) market looks like today. The company’s active role in the PC industry has hurt its stock in 2022, with the market downturn sending its stock price down 43% since January. However, those who bought it five years ago will still be smiling, as Nvidia’s stock has risen 256% over that time.
Although the company is best known for its PC offerings, Nvidia’s data center business accounted for the bulk of revenue in its third-quarter fiscal 2023 report, with the segment growing $3.83 billion. 31% over the previous year. According to BlueWeave Consulting, the $206.2 billion data center market will grow at a compound annual growth rate of 10.2% through 2028. Given Nvidia’s significant growth in the segment and a partnership recently announced with Microsoft to build a “massive artificial intelligence computer in the cloud”, Nvidia should see considerable gains for years to come.
Additionally, while Nvidia’s gaming segment brought in $1.57 billion, down 51% year over year, market declines are unlikely to last forever. Consumer spending will rise as inflation stabilizes, making Nvidia a worthy stock to buy now and hold for the long term.
As another major player in the GPU and PC industry, AMD’s stock has also fallen 48% year-to-date. However, that barely dented the 680% surge it has seen over the past five years.
The chipmaker has successfully expanded into several lucrative industries, such as PCs, console games and data centers. While its PC business took a hit in 2022 and led its customer segment to suffer the only drop in revenue from its business in Q3 2022, AMD’s other segments saw promising growth.
Games generated $1.63 billion in revenue, up 13.7% year-over-year, largely due to AMD’s successful partnership with sony and Microsoft. AMD exclusively supplies the chips that power Sony’s PlayStation 5 and Microsoft’s Xbox Series X|S, providing processing and graphics for game consoles. Both consoles have posted record sales figures over the past two years. With Sony and Microsoft expected to release more powerful versions of their consoles as early as 2023, AMD is well positioned to continue increasing console revenue.
Additionally, AMD’s data center segment reported revenue of $1.6 billion in Q3 2022, growing 45% year-over-year. Similar to Nvidia, AMD will likely continue to see its data center business grow as the booming industry rapidly expands alongside the $368.97 billion cloud computing market.
Over the past five years, AMD shares have risen more than those of almost any company. Its business may have been hit hard in 2022 by the macro downturns, but it remains a solid long-term buy.
Suzanne Frey, an executive at Alphabet, is a board member of The Motley Fool. Dani Cook has no position in the stocks mentioned. The Motley Fool holds positions and recommends Advanced Micro Devices, Alphabet, Apple, Microsoft and Nvidia. The Motley Fool recommends the following options: long calls $120 in March 2023 on Apple and short calls $130 in March 2023 on Apple. The Motley Fool has a disclosure policy.
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