The end of the year is swiftly approaching, and now is a great time to think about your investment goals for 2023. While a recession could potentially dampen your optimism for portfolio growth next year, a few companies have recently beaten market expectations despite a stock market sell-off, and could continue to win next year.
Advanced Micro Devices (AMD 0.46%) and Apple (AAPL 1.79%) defied market declines in the last month and could provide investors with significant gains in 2023.
1. Advanced Micro Devices
The PC market was hit particularly hard in 2022, with worldwide shipments declining by 19.5% in the third quarter, according to Gartner. As a leader in PC components, AMD has seen its stock fall 49% year to date because of market declines. However, investors have grown bullish in the last month, pumping up the stock by 24% since Oct. 13.
The rally came as AMD announced its latest data center chip, code-named Genoa, and said that cloud computing titans such as Microsoft's Azure and Alphabet's Google Cloud would be some of its customers. AMD's data center business has seen substantial growth in the last year, with revenue rising 45% year over year to $1.6 billion in the third quarter of 2022.
And the data center market is expected to see compound annual growth of 18.9% from 2022 to 2028, according to Grand View Research. AMD's market share in the industry has rapidly grown in the last few years, more than doubling from 10% to 22% between 2020 and 2022 by stealing share from Intel. As a result, AMD is well positioned to continue seeing gains from its data center segment in 2023.
And its gaming segment saw a year-over-year revenue rise of 13.7% in the third quarter to $1.63 billion. Despite declines in the tech market this year, AMD's gaming business was primarily boosted by being the exclusive supplier of Microsoft's Xbox Series X|S and Sony's PlayStation 5's system on a chip. Stock for the popular game consoles has stabilized in recent months, with 2023 looking likely to see substantial sales.
AMD shares suffered steep declines in 2022, but investors have gradually regained confidence in the company as growth in its non-PC segments has continued. The company's stock has seen a double-digit rise in the last month, which will likely continue through 2023, thanks to its promising gaming and data center businesses.
2. Apple
Few companies have defied market trends in 2022 like Apple. The Nasdaq-100 Technology Sector index has fallen 27% year to date, while Apple has dipped a more modest 16% in the same period as its products and services remain in demand. Apple has essentially propped up the market this year, which would appear in far more severe shape without it.
The company's fiscal 2022 proved the potency of its business in a year when hikes in inflation led to significantly decreased consumer demand for multiple companies. Apple enjoyed year-over-year growth in several segments, with iPhone sales increasing by 7% to $205 billion, Mac revenue by 14% to $40 billion, and Services by 14% to $78 billion.
Apple's continued growth this year bodes well for 2023, when the company is likely to complete its transition from Intel processors to its custom Apple Silicon chips within its Mac lineup. The iPhone manufacturer has spent the last couple of years moving each of its Macs to its custom chips, including the MacBook Air, MacBook Pro, iMac, and Mac Mini. But consumers are still awaiting an Apple Silicon Mac Pro and a beefier Mac Mini.
Since the third quarter of 2020, when Apple Silicon was first announced, the company's Mac revenue has risen 62% from $7 billion to $11.5 billion in the fourth quarter of 2022. As a result, completing the transition in 2023 could provide the company with a notable boost.
Furthermore, numerous reports suggest Apple is gearing up to launch an augmented/virtual reality (AR/VR) headset in 2023. Considering the immense success it has had with first entering markets such as smartphones, tablets, Bluetooth headphones, and smartwatches, I wouldn't bet against Apple soon dominating the $25 billion AR industry that is expected to have compound annual growth of 40.9% until 2030.
This year, Apple's robust business has proved its resilience and its ability to grow despite economic declines. As a result, the company is an excellent investment for 2023.
