There are some stocks you can buy with almost a guarantee that they'll pay off over the long term, thanks to their history of impressive growth. The tech industry is filled with compelling options, thanks to the ever-developing nature of the market.
Apple (AAPL -0.70%) and Advanced Micro Devices (AMD -3.65%) are two attractive tech stocks. These companies have enjoyed immense growth over the last five and 10 years, with recent developments likely to see them continue flourishing. Apple dominates in consumer tech and digital services, while AMD is at the forefront of rapidly increasing demand for chips.
Here are two hypergrowth tech stocks to buy in 2023 and beyond.
1. Apple
Apple's stock soared 273% in the last five years and 936% in the last decade. The company's impressive growth has been primarily driven by its leading market shares in multiple areas of consumer tech, such as smartphones, tablets, headphones, and smartwatches. However, recent years have seen Apple develop a booming services business.
The tech giant's online services include Apple TV+, Music, Fitness+, Arcade, News+, and iCloud, all accessible through monthly subscriptions. The digital business is strengthening Apple's revenue streams by offering impressive growth and lucrative profit margins and allowing it to lean less on its product segments.
In fiscal 2022, services earned the second-largest amount of revenue but reported double the growth of the iPhone, with 14% compared to 7%. Additionally, services profit margins hit 71.7%, while the same metric for products came to 36.3%.
Steep rises in inflation over the last couple of years have caused reductions in consumer spending on tech, affecting several companies in the space. In fact, according to research from IDC, Apple experienced a 40.5% decline in its Mac shipments in the first quarter of 2023, more than any of its biggest rivals.
The company's dominance in the industry and its priority on quality products will likely see it back on top over the long term. However, Apple's services business has helped it remain a hypergrowth tech stock worth an investment this year, with its $98 billion in free cash flow as of Dec. 30, 2022, proving it has the funds to overcome short-term hurdles.
2. Advanced Micro Devices
AMD has built itself into a tech behemoth, developing powerful chips with applications in various high-growth industries. As a result, its stock skyrocketed by 857% over the last five years and over 3,600% over the last 10. The company is a well-rounded option to invest in multiple swiftly expanding markets such as cloud computing, artificial intelligence (AI), gaming, and data centers.
The tech giant's diverse business paid off amid an economically challenging 2022, with its fiscal revenue rising 44% last year despite headwinds in its consumer-centered segments. Much of the growth came from data centers where AMD uses its graphics processing units (GPUs) and central processing units (CPUs) to power servers worldwide and run cloud platforms like Microsoft's Azure, Alphabet's Google Cloud, and Oracle. Recent advances in AI boosted many cloud services, with AMD in a prime position to profit from their development.
Moreover, AMD is steadily growing its dominance in semi-custom chips, achieving an 83% market share in game console processors. The company is the exclusive provider of chips for Microsoft's Xbox Series X|S and Sony's PlayStation 5 consoles, supplying the graphics and processing power necessary to run these machines. The success of both consoles boosted AMD's gaming segment in 2022, with revenue rising 21% year over year.
AMD's forward price/earnings-to-growth ratio of 0.12, which accounts for future earnings, suggests its stock is a bargain alongside its financial prospects. Along with its history of hypergrowth, this tech stock is a screaming buy in 2023 and beyond.
