2022 has been a challenging year for many stocks, especially those listed on the Nasdaq Composite. Down 28% year to date, the tech-heavy index is leading the market decline, and Amazon (AMZN -2.56%) and Pinterest (PINS -1.55%) haven't escaped the financial carnage. 

That said, better-than-expected inflation data (a rate of 7.7% instead of 7.9%) in October has ignited hopes the Federal Reserve might moderate its rate hikes and that the bear market will end sooner rather than later.

Let's dig deeper into why these beaten-down growth stocks could help position your investment portfolio for long-term success in a potential future bull market.

Green stock chart moving upwards against hundred-dollar bill.

Image source: Getty Images.

1. Amazon 

Down 42% year to date, Amazon has lost almost half of its value in less than 12 months -- a staggering loss of market capitalization for what is still a trillion-dollar company. But regardless of the declines, Amazon's long-term thesis remains intact.

Despite challenging comps against pandemic-boosted 2021, Amazon's revenue jumped 15% year over year to $127.1 billion. But profitability and guidance left much to be desired. Operating income fell by 48% to $2.5 billion, and management expects this number to be between zero and $4 billion in the fourth quarter (compared to $3.5 billion in the corresponding period of 2021). Amazon overinvested in its e-commerce capacity, and now it is paying the price through lower efficiency and margins.

The good news is this looks like a temporary challenge, and management is taking strides to bring costs in line. In November, the company announced plans to lay off around 10,000 workers (including in the retail division). This follows an earlier announced plan to reroute $10 billion from fulfillment and transportation investments to its cloud computing business (AWS) -- which saw third-quarter revenue jump 27% to $20.5 billion. 

Like many large companies, Amazon's fortunes may depend on the health of the overall economy. And while it is in a rough spot now, its long-term prospects look intact. Amazon's vast scale gives it a network effect in e-commerce (more consumers means more sellers and selection).

Management believes the economy is at the early stages of cloud adoption -- giving plenty of runway for AWS. Amazon's recent dip could be an opportunity to bet on its long-term prospects in these industries.

2. Pinterest 

With a 28% year-to-date decline, Pinterest is another Nasdaq stock that has had a rough go in 2022. Like Amazon, it suffers from the post-COVID slowdown in at-home activities. But its well-defined niche should help management navigate these near-term challenges. 

Pinterest is a unique social media platform that focuses on image sharing (typically clothing and accessories) for a typically female audience. This niche can give the company a strong economic moat while making it very well-suited to serve adjacent industries like e-commerce. 

Third-quarter earnings grew just 8% year over year to $685 million amid challenging comparisons to the previous year, when sales jumped 43%. But investors shouldn't have expected the temporary stay-at-home bump to last forever. With monthly user growth flat at 445 million, Pinterest is transitioning into a more mature platform that will need to rely on better monetizing its existing users instead of chasing new ones.

This shift will involve leaning into its appeal to its shopping-motivated audience to provide better, more targeted ads for its clients. 

In July, Pinterest announced the rollout of new merchant features like product tagging, which allows online stores to add item links to images so users can make purchases. The company is also completing synergistic acquisitions such as THE YES, an AI-powered e-commerce solution that helps personalize user feeds based on shopping behavior.

The efforts seem to be paying off with global average revenue per user jumping 11% to $1.56 in the third quarter. 

Focus on the long term 

There is no guarantee that inflation will continue falling or that the Fed will ease its rate hikes anytime soon. That means Pinterest and Amazon may continue facing challenges in the near term because of macroeconomic and company-specific headwinds.

That said, their substantial year-to-date declines seem to price in much of this risk, while their long-term value propositions remains intact. Both stocks look capable of overcoming their challenges and could richly reward patient investors when economic conditions improve.