With a stock market sell-off in 2022, it has become crucial to buy shares in companies likely to grow over several years. A long-term investment strategy can safeguard you from economic fluctuations, such as a potential recession in 2023.
Apple (AAPL -0.34%), Nvidia (NVDA -1.51%), and Advanced Micro Devices (AMD -3.23%) have each proven themselves as excellent growth stocks, with their share prices seeing triple-digit growth in the last five years despite declines this year. As a result, these companies’ stocks are no-brainer buys, allowing you to sit back and let your money work for you indefinitely. Here’s why.
As the most valuable company in the world by market cap, it’s hard to argue against investing in Apple. The company has developed a walled garden of products and services that manages to pull consumers further into its fold with just one purchase. For instance, people who buy an iPhone are more likely to choose Apple again when looking for a laptop, smartwatch, or tablet in the future, thanks to the effortless connectivity between its products.
This strategy has kept Apple growing amid economic headwinds this year and elevated its stock by 250% in the last five years despite a 18.5% dip year to date. In the fourth quarter of 2022, the iPhone manufacturer raked in $90.15 billion in revenue, a year-over-year rise of 8.1% and $1.38 billion more than Wall Street estimates. Additionally, operating income increased 4.6% to $24.89 billion.
In a year fraught with declines in consumer spending, strong sales from Apple’s iPhone 14 lineup led its smartphone segment to rise by 9.6% to $42.6 billion and its Mac segment by 25.3% to $11.5 billion. In fact, the success of the iPhone saw Apple officially overtake Alphabet‘s Android for the largest market share of smartphones in September, solidifying its dominance with 50% of the market in the U.S.
Apple is home to potent products, with a history of quickly dominating any new market it enters. Its success with its versions of the tablet, smartwatch, and Bluetooth headphones has proven that. With reliable stock growth over the last five years and rumored plans to enter lucrative markets such as augmented/virtual reality and electric vehicles, Apple is an excellent stock to buy now and hold forever.
Nvidia grew to prominence as one of the primary founders of what the graphics processing unit (GPU) market looks like today. The company’s active role in the PC industry has hurt its stock in 2022 as market declines have pulled its share price down 43% since January. However, those who bought it five years ago will still be smiling, as Nvidia’s stock has risen 256% in that timeframe.
While the company is best known for its PC offerings, Nvidia’s data center business made up the biggest portion of revenue in its Q3 fiscal 2023 report, with the segment’s $3.83 billion rising 31% from the year before. According to BlueWeave Consulting, the $206.2 billion data center market will see a compound annual growth rate of 10.2% until 2028. Considering Nvidia’s significant growth in the segment and a recently announced partnership with Microsoft to build a “massive cloud AI computer,” Nvidia stands to see considerable gains for years to come.
Additionally, while Nvidia’s gaming segment earned $1.57 billion, falling 51% year over year, market declines are unlikely to last forever. Consumer spending will rise as inflation settles, making Nvidia a worthy stock to buy now and hold for the long haul.
As another major player in the GPU and PC industry, AMD’s stock has similarly plunged 48% year to date. However, that has barely made a dent in the 680% rise it has seen in the last five years.
The chip manufacturer has successfully grown in multiple lucrative industries, such as PCs, console gaming, and data centers. While its PC business took a hit in 2022 and led its client segment to suffer the only revenue decline within its business in Q3 2022, AMD’s other segments saw promising growth.
Gaming generated $1.63 billion in revenue, rising 13.7% year over year, largely thanks to the success of AMD’s partnership with Sony and Microsoft. AMD exclusively supplies the chips that power Sony’s PlayStation 5 and Microsoft’s Xbox Series X|S, providing processing and graphics for the game consoles. Both consoles have seen record sales numbers over the last couple of years. Considering Sony and Microsoft are expected to release beefier versions of their consoles as early as 2023, AMD is well positioned to continue growing its console revenue.
Moreover, AMD’s data center segment earned $1.6 billion in revenue in Q3 2022, growing 45% year over year. Similar to Nvidia, AMD will likely continue to see its data center business grow as the burgeoning industry quickly expands alongside the $368.97 billion cloud computing market.
In the last five years, AMD shares have grown more than those of almost any company. Its business may have been hit hard in 2022 by macroeconomic declines, but it remains a solid buy for the long term.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.