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2 Red-Hot Growth Stocks to Buy in 2022 and Beyond

The stock market has given investors a difficult time in 2022, which is evident from the 10% decline in the S&P 500 so far. But this is also an opportunity for savvy investors to buy shares of some solid companies at attractive valuations. Amazon (NASDAQ: AMZN) and Advanced Micro Devices (NASDAQ: AMD) are two such companies that have borne the brunt of the stock market sell-off. Amazon stock is down 14% so far in 2022, while shares of AMD are down 30%. However, the tech giants have been in rally mode since the beginning of July thanks to the broader stock market recovery. Amazon stock has gained 31% since the beginning of last month, while AMD is up 37%. I think it's a good idea for investors to buy these hot growth stocks now, as they could head higher in 2022 and beyond. Let's look at the reasons why. 1. Amazon Amazon is currently trading at three times sales, which is lower than its five-year average sales multiple of 3.87. Investors shouldn't miss this opportunity to buy Amazon stock at this relatively attractive valuation given the company's latest results, which point toward better times ahead. Amazon released its second-quarter 2022 results on July 28. Its revenue increased 7% year-over-year to $121.2 billion, beating consensus estimates of $119 billion. The tech giant followed up its better-than-expected showing with a solid outlook, forecasting sales of $125 billion to $130 billion in the current quarter. That would translate into 13% to 17% year-over-year growth, suggesting that Amazon's growth is set to pick up. The company's diversified business streams helped it overcome the softness in the e-commerce segment last quarter. While online sales were down 4% year-over-year to $50.8 billion, strong growth in advertising, cloud, physical store sales, and subscription services led the company to stronger-than-expected results. Amazon Web Services (AWS) revenue, for instance, was up 33% year-over-year to $19.7 billion. The segment produced 16% of the company's top line. AWS' growth was driven by the addition of new products and services, which should help the company maintain its dominance in this market. More specifically, Amazon controlled 34% of the cloud infrastructure market in the second quarter. Synergy Research Group estimates that the cloud infrastructure space has generated $203.5 billion in revenue in the trailing twelve months ending June 2022. With the cloud computing market expected to clock 17.4% annual growth through 2030, Amazon is in a solid position to record incremental revenue growth thanks to its impressive market share. Meanwhile, the advertising business is turning out to be another key growth driver for the company. The segment generated $8.75 billion in revenue last quarter, an 18% increase over the prior year. Amazon has generated $16.6 billion from the advertising business so far this year, translating into an annual revenue run rate of over $33 billion. There's a lot of room for growth in Amazon's advertising revenue in the long run. The company's access to the data of millions of customers and subscribers, and its massive reach across the globe, make it an ideal choice for digital advertisers. With the digital advertising market expected to clock 17% annual growth through 2027 and generate over $1 trillion in revenue, this segment could turn out to be another big money-maker for Amazon, and drive the company's long-term growth. All these catalysts indicate why Amazon's earnings are expected to grow at an annual rate of 33% for the next five years, making it a solid growth stock to buy for the long haul. 2. Advanced Micro Devices AMD proved why it is a top semiconductor stock to buy following its latest quarterly report. The company's chips are used in a variety of applications ranging from computers to gaming consoles to data centers to cars. This diversification helped it deliver a solid set of results at a time when other semiconductor companies are struggling. AMD's second-quarter revenue shot up 70% over the prior-year period to $6.6 billion. Adjusted earnings were up 67% year-over-year to $1.05 per share. More importantly, the chipmaker reiterated its full-year guidance. AMD sees revenue growth of 60% in 2022 to $26.3 billion. Analysts expect the company's earnings to increase 57% in 2022 to $4.37 per share, but don't be surprised to see AMD deliver stronger growth, as its margin profile has improved following the acquisition of Xilinx. So AMD looks set to sustain its hot rally in 2022. That's why investors should consider buying AMD stock without further delay, as it is trading at 42 times earnings, well below its five-year average earnings multiple of 102. A forward price-to-earnings ratio of 23 points toward healthy growth in AMD's earnings. Even better, AMD has lucrative catalysts that should help it sustain its terrific growth in the long run. The data center market is one of them. AMD's data center revenue shot up 83% year-over-year in the second quarter to $1.5 billion as demand for its server processors remained robust. AMD's server processors are used by leading cloud service providers including Amazon, Microsoft, Baidu, Oracle, and Google. The server processor market is expected to hit $52 billion in 2026. AMD has generated $2.78 billion in data center revenue in the first two quarters of 2022. The potential size of the end market suggests that there is a lot of room for AMD to grow its revenue. The good part is that AMD is consistently taking market share away from Intel in the server CPU space. Mercury Research reports that AMD finished the second quarter with 13.9% of the server CPU market under its control, up from 9.5% in the year-ago period. The chipmaker looks well-placed to take more share away from Intel, as it is on track to launch new server processors this year that could reportedly perform better than the latter's offerings. All this indicates that AMD remains a resilient semiconductor bet despite the negativity around companies from this sector, and investors are getting a good deal on the stock right now that they may not want to miss. 10 stocks we like better than Amazon When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Amazon wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of August 11, 2022 John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Baidu, Intel, and Microsoft. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Today’s Big Picture Asia-Pacific equity indexes ended today’s session down across the board. India’s Sensex ended the day essentially flat, down 0.06%, China’s Shanghai Composite and Australia’s ASX All Ordinaries declined 0.54% and 0.55%, respectively while Japan’s Nikkei fell 0.65%, Taiwan’s TAIEX dropped 0.74% and South Korea’s KOSPI declined 0.90%. Hong Kong’s Hang Seng led the way, down 1.96% on a broad selloff led by Health Technology and Health Services names while Transportation and Communications sectors provided the only relief. By mid-day trading, major European equity indices are down across the board and U.S. futures point to a positive open later this morning. At 8:30 AM ET, the much anticipated July Consumer Price Index (CPI) report was released: The headline figure for the month was expected to fall to 8.7% from June’s blistering 9.1% reading with core CPI that excludes food and energy ticking higher to 6.1% in July vs. 6.0% the prior month. The actual numbers show that inflation hit 8.5%, and core inflation was 5.9%. With the national average retail price for a gallon of gas falling through late June and July from its June 14 high of $5.016 per gallon per data from AAA, forecasters had expected the month over month decline in the headline CPI for July. The July Employment Report also showed wage inflation ran hotter than expected during the month. Let’s also keep in mind that we will be facing a “wash, rinse, repeat” cycle when it comes to inflation data and expectations for the Fed given tomorrow’s July Producer Price Index report. Data Download International Economy Producer prices in Japan rose by 8.6% YoY in July, compared with market forecasts of 8.4% and following an upwardly revised 9.4% the prior month. While marking the 17th straight month of producer inflation, the latest reading was the softest since last December. China's annual inflation rate rose to 2.7% in July from 2.5% in June and compared with market forecasts of 2.9% but even so the July figure marked the highest reading in the last year. The country’s Producer Price Inflation figure for July eased to a 17-month low of 4.2% YoY from 6.1% the prior month and less than the market consensus of 4.8%. Annual inflation rate in Germany was confirmed at 7.5% YoY for the month of July, down slightly from June’s 7.6% reading but still above the March and April figures of 7.3%-7.4%. The annual inflation rate in Italy slowed to 7.9% YoY in July from June’s 8% reading matching expectations for the month. While energy prices declined, prices for food and transportation rose at a faster pace. Domestic Economy This morning we have the usual Wednesday weekly reports for MBA Mortgage Applications and Crude Oil Inventories from the U.S. Energy Information Administration. At 10 AM ET, Wholesale Inventories for June will be published, and the figure is expected to rise 1.9%. While investors and economists will keep more than a passing interest in those reports and data, as we discussed above, it will be the July Consumer Price Index report at 8:30 AM ET that will shape not only how the US stock market opens today, but also expectations for the Fed’s next course of monetary policy action. The U.S. Energy Information Administration (EIA) expects domestic production of crude oil, natural gas and coal will all increase next year compared with this year. It forecast US crude production rising 6.7% to an all-time annual high 12.7M bbl/day in 2023 from 11.9M bbl/day in 2022, US natural gas output climbing to 100B cubic feet (cf)/day from 97B cf/day, and US coal production inching up to 601M short tons in 2023 from an expected 599M this year. The EIA also modestly increased its 2022 average nationwide gasoline price forecast to $4.07/GALLON vs. $4.05 if called for last month. It now also sees 2023 prices at $3.59/GAL vs. its previous forecast of $3.57. Markets Stocks continued in their holding pattern waiting for the latest CPI print save for some fundamental stories pushing Technology names and small caps around. The Dow and the S&P 500 were down slightly at 0.18% and 0.42%, respectively while the Nasdaq Composite dropped 1.19% and the Russell 2000 closed down 1.46% on the day. Energy names led the way yesterday but were overpowered by Technology and Consumer Discretionary sectors. Here’s how the major market indicators stack up year-to-date: Dow Jones Industrial Average: -9.81% S&P 500: -13.51% Nasdaq Composite: -20.14% Russell 2000: -15.83% Bitcoin (BTC-USD): -52.08% Ether (ETH-USD): -55.38% Stocks to Watch Before trading kicks off, CyberArk (CYBR), Fox Corp. (FOXA), Jack in the Box (JACK), Nomad Foods (NOMD), Vita Coco (COCO), Tufin Software (TUFN), and Wendy’s (WEN) will be among the companies issuing their latest quarterly results and guidance. At 9 AM ET, Samsung (SSNLF) will hold its Galaxy Unpacked 2022 at which it is expected to introduce new Galaxy foldable smartphone models, a new Galaxy Watch, and Galaxy Buds. Shares of advertising technology platform company The Trade Desk (TTD) jumped after the company reported quarterly results that topped expectations and guided current quarter revenue above the consensus forecast. The RealReal (REAL) reported a smaller than expected bottom line loss for its June quarter as revenue for the period rose 47.2% YoY to %154.44 million, topping the $153.99 million consensus. However, the company issued downside guidance for both the current quarter and 2022. Revenue for the September quarter is now expected to be $145-$155 million vs. the $164.3 million consensus; for the full year of 2022, revenue is forecasted to be $615-$635 million vs. the $653.7 million consensus. Shares of Coinbase Global (COIN) moved lower after it reported June quarter results that missed top and bottom line expectations. Revenue for the quarter fell 63.7% YoY as Total trading volume fell 53.0% YoY and 29.8% sequentially to $217 billion. Monthly Transacting Users (MTUs) grew 2.3% YoY but fell 2.2% sequentially to 9.0 million. For the current quarter, Coinbase sees the number of MTUs trending lower sequentially and total trading volume to be lower compared to the June quarter. Shares of Sweetgreen (SG) tumbled in aftermarket trading last night after the company missed quarterly revenue expectations, lowered its 2022 forecast, announced it will lay off 5% of its workforce, and downsize to smaller offices. ChipMOS TECHNOLOGIES (IMOS) reported its July revenue was $65.1 million, a decrease of 19.4% YoY and down 7.7% MoM. Taiwan Semiconductor (TSM) reported its July revenue increased 49.9% YoY to NT$186.76 billion, which equates to a 6.2% MoM improvement. Electric vehicle subscription startup Autonomy placed a $1.2 billion order for 23K electric vehicles with 17 global automakers, including BMW (BMWYY), Canoo (GOEV), Fisker (FSR), Ford (F), General Motors (GM), Hyundai (HYMTF), Lucid Group (LCID), Mercedes-Benz (DDAIF), Polestar (PSNY), Rivian (RIVN), Stellantis (STLA), Subaru (FUJHY), Tesla (TSLA), Toyota Motor (TM), VinFast, Volvo Car (VLVOF) and Volkswagen (VLKAF). IPOs As of now, no IPOs are slated to be priced this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page. After Today’s Market Close Bumble (BMBL), CACI International (CACI), Coherent (COHR), Dutch Bros. (BROS), Red Robin Gourmet (RRGB), and Walt Disney (DIS) are expected to report their quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. On the Horizon Thursday, August 11 Germany: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August US: Weekly Initial & Continuing Jobless Claims US: Producer Price Index – July US: Weekly EIA Natural Gas Inventories Friday, August 12 Japan: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August China: China Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August Eurozone: Industrial Production - June US: Import/Export Prices – July US: University of Michigan Consumer Sentiment Index (Preliminary) – August Thought for the Day “The release date is just one day, but the record is forever.” ~ Bruce Springsteen Disclosures Tufin Software (TUFN), CyberArk (CYBR) are constituents of the Foxberry Tematica Research Cybersecurity & Data Privacy Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Sustainability Screened Index The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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