In 2022, the Nasdaq Composite The index fell 33% as a rise in inflation curbed business and consumer spending. Countless companies posted dismal results, prompting investors to lower their shares. However, economic improvements have allowed for a market recovery this year, and the Nasdaq is up 36% since January 1.
That pattern highlights why it's crucial to hold on to your investments during bad economic conditions and why a selloff could be the best time to expand your portfolio. Those who sold in 2022 will not have benefited from the rally many stocks have enjoyed this year.
As such, it's not a bad idea to familiarize yourself with some of the best stocks to buy in the event of a market downturn, so you can be prepared to pounce if one occurs. So, here are two obvious stocks to buy during a stock market crash.
1. Amazon
Amazon's (AMZN -0.53%) The business proved particularly vulnerable to macroeconomic headwinds last year, with its shares falling 50% as its e-commerce segments saw significant declines. However, the company achieved an impressive turnaround in 2023, turning its retail business back to profitability and rallying investors with an expansion in artificial intelligence (AI).
In the third quarter, Amazon's revenue rose more than 13% year over year, beating the Wall Street consensus forecast by $1.5 billion. The company benefited from strong growth in its North American segment, which reported an 11% increase in revenue and operating income of more than $4 billion. That was a huge improvement over the $412 million in operating losses the segment reported in the prior-year quarter.
After a challenging 2022, Amazon adopted several cost-cutting measures, including laying off thousands of people, closing warehouses, and shutting down unprofitable projects like Amazon Care. These moves illustrated management's strength, with its ability to successfully navigate poor economic conditions and generate significant growth in the company's retail segments. As a result, Amazon heads into 2024 on better financial footing than it did earlier this year, making it an attractive investment, especially during a selloff.
Amazon's business might not be as vulnerable to economic fluctuations after its recent cost-cutting measures, but its stock would likely still fall in a broad market decline. However, this year's comeback suggests it won't be down for long. In addition to a lucrative cloud business with Amazon Web Services and a growing position in artificial intelligence, Amazon stock is a great option if the stock market takes a hit.
2. apple
Apple (AAPL 0.24%) stock has earned a reputation for reliability over the years. In fact, it outperformed four of its largest technology competitors in 2022, as well as the Nasdaq Composite index. The company's shares proved resilient during the difficult period and became a haven for many investors.
Data by Y Charts.
In 2023, macroeconomic headwinds caught up with Apple. Its revenue fell 3% year-over-year in its fiscal 2023 year (which ended Sept. 30) after repeated sales declines in its product segments. However, its shares are up about 46% since Jan. 1, as its history of consistent long-term profits overshadowed temporary hits to its business. Investor loyalty means Apple shares rarely go on sale, with a stock market sell-off making a compelling time to buy.
Despite poor market conditions this year, Apple's dominance in consumer technology products remains a compelling reason to invest in its stock. The company has leading market shares in most of its product categories and has much to gain from the industry's recovery.
Additionally, Apple is investing heavily in the burgeoning AI market, already worth $137 billion, with Grand View Research projects set to expand at a compound annual rate of 37% through 2030. In fiscal 2023, Apple's research and development spending increased by $3.6. billion, mainly due to its investments in generative AI.
The company's research has allowed it to develop its own large language model and make AI updates across its product line this year. Popular products like the iPhone, Apple Watch, and AirPods Pro now offer AI features, improving user experience and reinforcing brand loyalty.
As a leader in consumer technology, Apple will likely play a crucial role in public adoption of AI. While most AI-oriented companies focus on the commercial sector, Apple's prioritization of consumers could give it a lucrative position in the industry in the long term.
Over the past five years, Apple stock is up 341%, more than Microsoft, Alphabet or Amazon gained during that period. While past growth isn't always indicative of what's to come, Apple's dominance in consumer technology and its expansion into booming markets like AI will likely continue to offer investors significant returns for years. The company is a spectacular buy in a market crisis and an exciting long-term investment.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Alphabet executive Suzanne Frey is a member of The Motley Fool's board of directors. Danny Cook has no position in any of the stocks mentioned. The Motley Fool ranks and recommends Alphabet, Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy.
