Last year, a lengthy bear market highlighted the importance of investing in reliable growth stocks. Economic headwinds brought down the entire market but also created an excellent time to invest in stocks that don't often go on sale. Tech stocks were some of the most attractive options, given the sector's history of consistent growth over the long term.
Tech giants like Amazon (AMZN 1.95%), Advanced Micro Devices (AMD 0.56%), and Apple (AAPL 1.79%) watched their stocks plunge 50%, 55%, and 27%, respectively, throughout 2022. However, their promising long-term outlooks and past growth make them no-brainer buys amid a market downturn.
Let's take a closer look at these three growth stocks and see why they're good buys in a bear market.
1. Amazon
In the event of a bear market, it's crucial to invest in companies active in high-growth sectors that will likely provide gains long after the slump has passed. As a result, Amazon's leading market shares in e-commerce and cloud computing make its stock a compelling investment.
In the U.S., the tech company holds a 38% market share in e-commerce, with the second-largest share being Walmart, at 6%. Amazon's dominance in online retail means it has the most to gain from the industry's growth. Meanwhile, data from eMarketer shows the e-commerce market hit $5.7 trillion in 2022, with online sales making up about 20% of all retail purchases. That percentage is projected to hit 24% by 2026, with the market rising to a value of $8 trillion.
Moreover, Amazon has a solid position in the booming artificial intelligence (AI) industry as the home of the world's biggest cloud platform, Amazon Web Services. The cloud service boasts a leading 32% share of the market, ahead of competitors like Microsoft's Azure and Alphabet's Google Cloud.
Amazon may have shown its vulnerability to macroeconomic headwinds last year, but its long-term prospects in two lucrative sectors make it an attractive stock for patient investors.
2. Advanced Micro Devices
Like Amazon, Advanced Micro Devices has the potential to profit from the development of multiple industries. The company's chip business has granted it solid positions in a variety of markets, with its hardware powering cloud platforms, AI models, game consoles, PCs, and more. As the tech industry expands, more and more companies will be turning to chipmakers like AMD to take their devices to the next level, bolstering the semiconductor company's stock over the long term.
AMD's stock may have taken a deep dive last year, but those who took advantage of the bear market have benefited from its 72% rise since Jan. 1. Wall Street has grown particularly bullish about AMD this year, thanks to its potential in AI. The company's chips can run and develop AI software, with the market expected to expand at a compound annual growth rate of 37% through 2030.
Additionally, AMD's financials are on a solid growth track. Over the last five years, annual revenue has risen 265%, while operating income has increased 180%. Alongside a swiftly expanding business, AMD is an excellent option at almost any time but especially during a bear market.
3. Apple
Apple has a reputation for reliability, with the potency of its products leading it to achieve the world's largest market capitalization at $2.9 trillion. In fact, Apple's products are so popular it has the third-largest e-commerce market share in the U.S. at 4% despite having a significantly smaller lineup of products than companies like Amazon and Walmart.
The success of Apple's products has resulted in a relatively stable stock price that doesn't often experience dramatic peaks and valleys. However, that also means it doesn't often go on sale. The chart below proves Apple's resilience, with its stock seeing the lowest decline among the five biggest names in tech in 2022 despite the economic downturn.
Data by YCharts
Looking to the future, Apple investors have plenty to rally over. The company has a lucrative services business that reported revenue growth of 14% in fiscal 2022, a growing position in fintech with its own credit card and savings account, and a recent venture into the high-growth virtual and augmented reality market with a new headset. Apple may be dominating consumer tech, but there's still plenty of room for growth ahead, making its stock a compelling investment.
