Amid macroeconomic headwinds in 2022, stocks across multiple industries fell out of favor, with companies active in tech and entertainment hit especially hard. However, it's always best to invest in a stock based on a company's long-term prospects, since holding over many years can safeguard your investment against temporary downturns.
Advanced Micro Devices (AMD +13.91%), Warner Bros. Discovery (WBD +0.63%), and Take-Two Interactive Software (TTWO +0.41%) suffered stock declines between 41% and 62% throughout 2022. However, lucrative ventures and coming developments make these companies' stocks no-brainer buys right now. Let's assess.
Advanced Micro Devices
AMD is best known to consumers for its graphics processing units (GPUs) and processors (CPUs), which have soared in popularity over the last decade as more and more gamers have opted to build custom PCs to play the newest titles at higher settings than are possible on consoles. However, last year's economic downturn led to steep declines in the PC market, with worldwide shipments for GPUs falling 42% throughout 2022 and AMD's stock falling 55% in the same period.
Despite the market declines, the performance of AMD's businesses in data centers and embedded processors is encouraging. Data centers brought in the biggest portion of revenue in 2022, rising 42% year over year to $1.65 billion. The stellar growth is thanks to the booming cloud market, worth $369 billion in 2021 and projected to grow at a CAGR of 15.7% through 2030, according to Grand View Research.
NASDAQ: AMD
Key Data Points
Additionally, AMD's embedded segment has skyrocketed over the last year after the business acquired Xilinx in 2022. Xilinx is developing specialized CPUs used in products for artificial intelligence, aerospace and defense, industrial applications, and space exploration. AMD's embedded segment reported a rise in revenue of more than 1,800% in 2022, hitting $1.39 billion and boosting the company's long-term outlook.
AMD's stock has risen 557% in the last 5 years and 2,860% in the last 10 years. It's one of the best growth stocks out there, with its prospects in two lucrative markets making it a no-brainer buy right now.
Warner Bros. Discovery
Warner Bros. Discovery's stock plunged more than 60% in 2022 as restructuring costs and controversial moves spooked investors. However, Wall Street seems optimistic about the entertainment giant in the new year, with the company's stock up 61% since January 1. The stock sympathetically rose as streaming peer Netflix reported an addition of more than 7 million new subscribers in its latest quarter, while recent success in video games has pumped Warner Bros. Discovery shares further.
The company launched the console and PC Harry Potter-themed video game Hogwarts Legacy on February 10, and it has become an overnight hit. The game has become the third-most-played single-player game of all time on PC in less than two weeks, a positive sign considering console sales are traditionally much higher. Hogwarts Legacy has also topped U.K. charts two weeks in a row as the best-selling game.
NASDAQ: WBD
Key Data Points
In addition to a healthy boost to earnings in its current quarter, Warner Bros. Discovery's success with Hogwarts Legacy could reinvigorate interest in the franchise, encouraging park attendance and merchandise sales. The company has also shown interest in having a soft relaunch of its Harry Potter franchise at the box office, similar to what it is doing with DC, which could be a positive step toward growing earnings over the long term.
Warner Bros. Discovery's stock is currently trading at 17 times its earnings. Comparatively, Netflix's price-to-earnings ratio is 30, while Walt Disney's is 48, making Warner Bros. Discovery's stock a far better bargain than those of its biggest competitors. With a recent success and a promising outlook, the company's stock is a must-buy.
Take-Two Interactive Software
Economic challenges and the questionable acquisition of mobile games company Zynga last year dragged down Take-Two's stock by 41% throughout 2022. However, because it is the world's tenth-largest game company and fourth-largest developer, its stock dip makes for a compelling investment. The company is home to such game franchises as Grand Theft Auto, Red Dead, Borderlands, and NBA 2K, which have made it a dominating force in the industry.
Take-Two's video game Grand Theft Auto V (GTA V) has brought in $7.68 billion in revenue since it launched in 2013. And in 2018, GTA V became the highest-grossing single entertainment product in history, more than any other game or movie ever.
NASDAQ: TTWO
Key Data Points
While GTA V is undoubtedly a cash cow for Take-Two, it's the announcement of a coming sequel that makes its stock worth an investment. There is no confirmed launch date for the game; however, MoffettNathanson analyst Clay Griffin upgraded the company's stock on January 27 and set a price target of $140, a 25% increase. Griffin expects "major announcements right around the corner," including the next GTA and sequels to other successful franchises.
With Take-Two's stock still down nearly 30% year over year and exciting developments on the way, it makes an excellent long-term investment.
