The new year will be here before we know it, making now an excellent time to start figuring out your investment goals for 2023. A stock market sell-off has brought down the share prices of some of the world's most valuable companies, which could allow you to buy a bargain stock now that will soar next year.
Amazon (AMZN 2.77%), Disney (DIS 1.27%), and Microsoft (MSFT 0.58%) have each watched their stocks tumble in 2022, despite having considerable market shares in some of the world's most lucrative industries.
These companies have some big plans in 2023 and could provide significant gains over the long term. Here's why.
Amazon
Amazon shares have plunged 46% year to date as macroeconomic headwinds in 2022 have led to unfair comparisons against the previous year. In 2021, COVID-19 lockdowns significantly boosted the company's e-commerce business as homebound consumers looked to Amazon for their must-buys.
However, the poor economic environment of the last 12 months has proven the strength of Amazon's business. In the third quarter of 2022, revenue rose 14.7% year over year to $127.1 billion.
Additionally, revenue in its North American segment climbed 20% to $78.8 billion, while its international business decreased by 5% to $27.7 billion. Excluding foreign exchange strains from a strong U.S. dollar, Amazon's international segment saw a 12% increase in revenue.
Next year, Amazon's stock could benefit from revenue comparisons to 2022. Despite rising inflation, consumer spending has risen for the last three quarters, a trend that could continue into 2023.
So along with the company's booming cloud computing business in Amazon Web Services (AWS), Amazon could inspire a rally from investors as earnings climb next year.
However, even if that is not the case, Amazon remains a worthy investment exclusively for AWS. Revenue in the segment rose by 27.4% to $20.5 billion in Q3 2022, earning 100% of Amazon's operating income.
With the industry expected to have a compound annual growth rate of 15.7% until 2030, there's no better time to invest in its leading participant, Amazon.
Disney
Disney's stock has plunged 39% since January, with heavy investment in its streaming business taking a bite out of its media revenue. The company has used the last year to restructure its business, prioritizing profits. The shift hasn't come cheap; however, Disney could start reaping the rewards as soon as 2023.
After significant declines in its parks business throughout 2021 thanks to pandemic closures, guests returned in droves this year. In fourth-quarter 2022, Disney's parks revenue soared 36% year over year to $7.4 billion, with operating income skyrocketing more than 100% to $1.5 billion.
The media and entertainment segment was less lucky, with revenue declining 3% to $12.7 billion and operating income declining 91% to $83 million. Disney's media business was largely hurt by its $30 billion content spend throughout its fiscal 2022, primarily aimed at expanding its streaming service Disney+.
This month, Disney launched its ad-supported tier on Disney+ and applied price hikes across all of its streaming platforms. Despite the hefty investment required, Disney reached 235.7 million subscribers across its three streaming platforms, surpassing Netflix's 223.09 million members.
The company has become the streaming leader in 2022 and could start seeing improved media revenue next year once the effects of its ad tier and increased prices kick in.
While 2022 was filled with restructuring costs for Disney, the company will go into 2023 with a flagship streaming service headed toward profitability and strong attendance at its parks.
Microsoft
As the home of some of the world's top brands, such as Windows, Office, Xbox, and Azure, Microsoft has strong footholds in multiple lucrative industries. The tech titan has plans to further expand its position in different industries, which could make its stock pop in 2023.
As with Amazon, its best-performing segment in recent years has been its cloud computing business, which had revenue grow by 20% in first-quarter 2023 to $20.3 billion and operating income rise 17% to $8.9 billion.
Starting in 2023, Microsoft plans to further its cloud computing efforts by investing in at least 11 new regions worldwide by building more data centers.
CEO Satya Nadella revealed the news in mid-November, explaining that Microsoft is "very bullish" about Asia and calling it a "massive growth market."Additionally, the company recently partnered with Nvidia for a multiyear collaboration to build a "massive cloud AI computer" powered by Azure.
Furthermore, 2023 will allow more time for Microsoft's digital advertising business to develop. After acquiring Xandr in 2021, the company signed up as the exclusive supplier for ads on Netflix's ad-supported tier, which launched in November.
As a result, 2023 could mean big things for Microsoft, with now being the perfect time to invest before we ring in the new year.
