The technology-heavy Nasdaq-100 stock index has gotten off to a red-hot start to 2023 -- it's up by 21% so far. That might come as a surprise to many investors owning stock in some of its components, who endured a miserable 2022 during which that index plunged by 33%. It's still more than 20% below its peak.

But since 1986, the Nasdaq-100 has almost never declined for two years in a row. In fact, the only times that consecutive declines happened were during the dot-com crash from 2000 to 2002. Every other time it has suffered a down year, it has bounced back with a positive return the following year.

That's good news for investors in more ways than one. Excluding the dot-com bust period, the Nasdaq-100 has delivered an average return of 52% in the year after a loss. Based on the index's return in 2023 so far, there could be a further 31% worth of upside in the cards.

If the rest of this year does bring more gains, here's why Netflix (NFLX -0.63%) and Palo Alto Networks (PANW 0.91%) could be among the biggest winners. 

1. Netflix

Plenty of companies claim to be disruptors, but few can say they triggered a paradigm shift in the way their customers behave. Netflix falls into the latter category without a doubt. After making physical DVD rentals more convenient by using the internet in 1997, it launched its streaming service a decade later, which has entirely reshaped the way people consume video content. 

Netflix's success triggered an avalanche of competition. There are more than 60 streaming services with at least 1 million subscribers today. Almost every media company with a valuable catalog of movies or television shows has set up its own platform, including Disney and Amazon, but none have been able to topple Netflix's dominance -- it has amassed 231 million subscribers to date.

In an effort to broaden its reach, Netflix launched a cheaper ad-supported subscription tier toward the end of 2022. According to Bloomberg, that option has already attracted 1 million signups, and it's now responsible for about 20% of new customer acquisitions in the U.S.

In other words, Netflix is finding growth in a geographic market many analysts thought was saturated. But Netflix management believes there are still plenty of opportunities to expand because the service still accounts for less than 10% of television screen time in mature countries like the U.S. and the United Kingdom. In many of its emerging markets like Brazil and Mexico, it represents under 5% of television time.

Netflix generated revenue of $31.6 billion in 2022, and it has achieved one thing no other stand-alone streaming service has: profitability. It earned $4.5 billion on the bottom line last year, giving it more flexibility than its competitors to shuffle its content catalog without financial pressure during this tough economic climate. 

Netflix stock remains 50% below its all-time high despite a 17% gain thus far in 2023. With the help of a broader market rebound and continued subscriber growth, its stock might have plenty more upside this year. 

2. Palo Alto Networks

The cybersecurity industry in general is set up for growth because organizations are more reliant than ever on cloud computing technology. As they continue to digitize their businesses, their attack surfaces are growing larger, and they're becoming more vulnerable to threats that could originate from anywhere in the world. That's why, according to a 2022 survey by Morgan Stanley, cybersecurity is the IT expense companies that companies are least likely to cut if a recession occurs.

Palo Alto Networks is one of the leading cybersecurity providers, particularly for large, complex organizations. It stopped reporting a breakdown of its customer base in its fiscal 2023 second quarter (which ended Jan. 31), but in the previous quarter, it had 1,262 customers spending at least $1 million per year on its cybersecurity services. What Palo Alto did tell us in its latest quarterly report, though, is that the number of deals it did worth $1 million or more jumped 19% year over year. Plus, the number of deals it closed in the $10 million category soared by a whopping 144%.

The company is popular because of the breadth of its solutions across the cloud, security operations, and identity (zero trust). It's a one-stop shop, no matter the client's requirements. In fact, it had 35 new major product releases in the first half of its fiscal 2023 alone, up 59% year over year. And over the last 12 months, it has invested $1 billion in its innovation pipeline -- five times more than some of its key competitors.

Palo Alto is on a roll from a financial perspective. In fiscal Q2, it reported a 39% year-over-year increase in its remaining performance obligations (RPOs), which was a growth acceleration from fiscal Q1. That pipeline of future revenue is now worth $8.8 billion. Simply put, despite a tough economic climate, Palo Alto is shifting into a higher gear when it comes to growth.

It should be no surprise, then, that Palo Alto stock has jumped 44% in 2023, more than doubling the year-to-date return of the Nasdaq-100. And if the index continues to soar, there's plenty of scope for Palo Alto stock to move higher along with it.