The tech market was hit particularly hard last year as rising interest rates caused reductions in consumer and commercial spending. Product sales plunged, with shoppers reluctant to upgrade various devices. Meanwhile, budget cuts saw businesses de-prioritize cloud and advertising services. The marketwide declines triggered a sell-off, with the Nasdaq-100 Technology Sector index tumbling 40% throughout 2022.
However, the same index has soared nearly 50% this year, illustrating the resilience of the tech sector and why it's crucial to keep a long-term mindset when investing. Those who sold amid last year's economic downturn will not have benefited from the recovery many stocks have enjoyed since January.
The tech market is booming, bolstered by high-growth sectors such as artificial intelligence (AI) and cloud computing. As a result, now is an excellent time to consider a long-haul investment in the industry and profit from the development of these markets. Below are two hyper-growth tech stocks to buy in 2023 and beyond.
1. Advanced Micro Devices
The entire tech market is increasingly reliant on chipmakers, with their powerful hardware necessary to push countless sectors forward, from AI to video games, cloud computing, virtual/augmented reality, consumer products, and more. Increased demand has sent Advanced Micro Devices (AMD -0.92%) shares soaring 480% over the last five years.
However, it's still early days for many of these industries, with chip demand likely to continue rising over the long term. The AI market alone hit $137 billion in revenue in 2022 and is projected to expand at a compound annual growth rate of 37% through 2030. Meanwhile, AMD is preparing to launch a new AI chip in 2024 that has been described as its most powerful graphics processing unit (GPU) ever and is designed to challenge Nvidia's dominance.
In addition to AI, AMD has a powerful position in the PC industry, with its hardware powering millions of laptops and custom-built desktops worldwide. The PC market has suffered steep declines over the last two years alongside macroeconomic headwinds. However, it has recently shown signs of recovery. In the third quarter of 2023, AMD's client segment returned to profitability and hit revenue growth of 42% year over year. The rise was primarily owed to increased sales of central processing units for desktops and notebooks.
AMD is heading into 2024 with exciting prospects in AI and gradually increasing sales in its PC chip business. The company has delivered stellar stock growth since 2018, but its shares could climb far higher in the coming years as chip demand continues to soar. As a result, AMD's stock is an excellent option to invest in tech this year.
2. Amazon
Shares in Amazon (AMZN -1.24%) have risen 81% over the last five years. While that growth might not be on the same level as AMD's, it is impressive considering the challenges the retail giant has faced in that time.
Amazon's stock hit record heights in 2021 as COVID-19 lockdowns made it the shopping go-to for consumers worldwide. However, economic hurdles saw its shares plunge 50% in 2022, losing everything it had gained the year before after significant declines in retail sales and unfair year-over-year comparisons.
Yet, Amazon has proven its resilience in 2023 and shown why it remains a tech stock that investors can rely on over the long term. The company's share price has climbed 72% year to date as cost-cutting measures have brought its e-commerce business back to profitability, and it has gradually expanded in AI.
In Q3 2023, Amazon posted a 12% increase in revenue to $143 billion, with operating income jumping over 340%. The company profited from massive growth in its North American segment, which delivered over $4 billion in operating income compared to $412 million in losses it reported the year before.
Amazon's e-commerce business is back on a growth path, with plans to continue expanding in the space. On Nov. 17, the company announced it had partnered with Hyundai to begin selling cars online in 2024. The news caused multiple car dealer stocks to tumble as investors expect Amazon to shake up the industry.
In addition to the company's leading market share in cloud computing with Amazon Web Services (AWS) and its growing position in AI, Amazon is an immensely attractive growth stock in 2023 and heading into next year.
