2 Hypergrowth Stocks to Buy in 2023 and Beyond

The technology industry was hit hard in 2022 as economic headwinds led to a drop in consumer spending and the Nasdaq-100 Technology Sector Index fell almost 40% over the year. However, the wealth of growth stocks in the market paid off as many tech companies maintained their immense long-term growth despite the sell-off.

As such, investing in solid technology companies with notable stock growth can be one of the best choices for your portfolio.

Here are two hyper-growth stocks to buy in 2023 and beyond.

1. Advanced Micro Devices

As a leading provider of computer components, Advanced Micro Devices (AMD -1.62%) is building the future. In addition to selling its hardware to consumers, the company operates a variety of devices and digital services in industries such as cloud computing, virtual reality, video games, artificial intelligence, and more.

AMD’s position in several emerging industries has resulted in immense stock growth. The company’s shares have soared 570% over the past five years and over 3,000% over the past decade. Even better, the company has strong prospects for strong growth in the years to come.

In fiscal 2022, AMD’s data center revenue grew 63.6% year over year to $6.04 billion. Meanwhile, operating income nearly doubled, rising 86.5% to $1.8 billion. The significant growth is mainly due to the fast-growing cloud market. AMD’s graphics processing units (GPUs) and processors operate data centers around the world running cloud platforms such as Amazon Web Services, Microsoft’s (MSFT -1.48%) Azure and Oracle.

According to Grand View Research, the cloud market was valued at $483.98 billion in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 14.1% through 2030. AMD’s hardware is likely to play a key role in that growth.

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Additionally, the company’s $50 billion purchase of Xilinx in 2022 is already paying off. The acquired company develops programmable chips for specialized applications in sectors such as industrial, aerospace and defense and has immense potential in artificial intelligence (AI). In 2022, AMD’s embedded segment saw revenue grow over 1,700% to $4.5 billion while operating income grew more than 5,000% to $2.25 billion, with development primarily driven by Xilinx became.

AMD has seen strong growth in its stock over the past five and 10 years, with its position in several lucrative industries likely to thrive indefinitely.

2.Microsoft

While AMD is responsible for the hardware behind several high-growth markets, Microsoft’s stock is a great way to invest on the software side. The company’s dominance in digital industries like operating systems, productivity software, gaming, and cloud computing has seen its stock soar 161% over the past five years and 801% over the past decade. Powerful brands like Windows, Office, Xbox, and Azure have propelled the tech company onto a hyper-growth path.

Additionally, Microsoft’s cloud computing platform, Azure, has the second-largest market share in the industry at 21%. As a result, the company’s intelligent cloud segment reported revenue growth of 18% year over year to $21.5 billion in the second quarter of 2023 (ended December 2022), with revenue from Azure notably growing 31%. Segment operating income increased 7% year over year to $8.9 billion.

In addition to a solid position in cloud computing, Microsoft is likely to play a lucrative role in AI development. According to Grand View Research, the AI ​​market was worth approximately $136.55 billion in 2022 and will grow at a CAGR of 37.3% through 2030. Meanwhile, Microsoft’s $1 billion investment in start-up OpenAI in 2019 has seen advanced AI programs like ChatGPT integrated with Azure services and its search engine Bing. Microsoft plans to invest another $10 billion in OpenAI to strengthen its position in the high-growth market.

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The tech giant’s priority on developing future technologies strengthens its long-term perspective. With a history of impressive stock growth, Microsoft is a great investment in 2023 and beyond.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dani Cook does not hold any of the shares mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon.com, and Microsoft. The Motley Fool has a disclosure policy.