The biggest stock market surprises of 2023: Unexpected winners and losers

The year 2023 has primarily been marked by economic uncertainty coupled with geopolitical tensions, impacting various investments, such as stocks. 

Despite the prevailing conditions, the stock market has delivered contrasting results, with some equities standing out in gains and leading the general market recovery. In contrast, others have lagged throughout the year.

In this regard, Finbold has compiled notable stock market winners and losers in 2023 alongside underlying fundamentals influencing their price trajectory. Below are the two stocks that emerged among surprise winners, having managed to sustain gains for the part of the year. 

Nvidia 

Nvidia (NASDAQ: NVDA) stands out as a success story of this year’s stock market, with its equity more than tripling and propelling the company’s market capitalization beyond the coveted $1 trillion mark, establishing it as the most valuable chipmaker.

The foundation of Nvidia’s success lies in its strategic focus on technology, particularly artificial intelligence (AI) and GPUs. The unprecedented demand for Nvidia’s GPUs, essential for diverse AI applications, has significantly increased its market value. This surge underscores the growing importance of AI technologies across sectors, fueled partly by the success of OpenAI’s ChatGPT.

This backdrop has led to the company achieving record-setting financial results throughout 2023. 

Notably, the gains coincide with the company’s ongoing strategic efforts to meet the growing demand for its chips. For instance, Nvidia has accelerated its product roadmap for AI chips and is reportedly planning to manufacture its upcoming gaming cards using a more advanced 3-nanometer (nm) processor, surpassing the current RTX 40-series processors made on a 5nm processor.

Indeed, the company is banking on demand for its chip for sustained growth despite existing competition in the market. 

Elsewhere, by the close of the market on Friday, December 22, Nvidia stock was valued at $488.30, representing year-to-date gains of 241%. 

Applied Optoelectronics

Applied Optoelectronics (NASDAQ: AAOI) has claimed the spotlight among the stock market champions of 2023, boasting an impressive return of over 1000%. Indeed, one of the stock’s pivotal moments emerged in August, fueled by robust earnings that ignited a bullish catalyst after recording greater-than-expected revenue of $52.3 million.

AAOI’s shares surged, reaching new heights, as it solidified its position among top tech suppliers through a strategic partnership such as the one with Microsoft (NASDAQ: MSFT). In particular, Applied Optoelectronics revealed its entry into  an agreement to provide Microsoft with “specific design and assembly services for goods.” This arrangement will extend over five years and undergo automatic renewal unless terminated.

The company’s stock continued to rally, driven by a robust optical networking technology portfolio that fortified its standing in the cable TV market. Applied Optoelectronics prowess in the 100G products space, which aims to meet growing demand in the data center business, further contributed to its positive trajectory.

Indeed, the stock showed resilience, considering its precarious financials. For instance, AAOI’s free cash flow (FCF) was notably red, with a negative $18 million reported in the latest quarter. 

Currently, AAOI is valued at $20.90, with YTD gains of 1,011%. 

Stock market 2023 losers 

In addition to the stock market winners, the following equities faced headwinds as they grappled with challenging business environments, resulting in significant losses in 2023.

Cazoo

Online used car retailer Cazoo (NYSE: CZOO) stands out as one of the prominent losers, grappling with significant setbacks since its listing in August 2021. Since its debut on the stock market, Cazoo has experienced a drastic plummet in its share price, marking one of the most severe post-pandemic hangovers among automotive tech stocks.

The company’s troubles began with a staggering drop of over 90% in its shares in 2022, forcing Cazoo to take drastic measures, including laying off staff and withdrawing from its operations in the European Union. The combination of mounting costs and a downturn in consumer spending exacerbated the company’s challenges.

Furthermore, the challenging economic environment characterized by inflation, high interest rates, and persistent supply chain problems has partly contributed to the company’s woes. 

In response to the adverse conditions, Cazoo embarked on a journey to enhance operational efficiencies, optimize fixed costs, and bolster its cash position, all with the overarching goal of achieving profitability in the coming years. The retailer’s strategic move was to sell 40,000-50,000 U.K. retail units in 2023. Indeed, based on the stock movement, the measures appear not to have influenced the equity. 

Cazoo also reported a substantial decline in revenues during the third quarter, with figures plummeting to £173 million, down from £347 million in the same period the previous year. This decline was accompanied by a 50% dip in the number of vehicles sold, totaling 12,021. 

As of 2023, the stock has witnessed an alarming nearly 100% plunge, underscoring the depth of the challenges faced by the troubled retailer. Currently, the stock is valued at $11.05. 

JD.com

In 2023, JD.com  (NASDAQ: JD), a major player in Chinese e-commerce, grappled with challenges amid the nation’s economic struggles. The company’s stock has witnessed a significant 50% decline this year, reflecting the intricate dynamics of China’s macroeconomic environment.

Despite signs of potential easing in growth challenges, broader concerns about the world’s second-largest economy left a lasting impact on JD’s stock performance as it failed to pick up. Unexpectedly flat consumer prices in September, following a rebound in August, raised concerns about weakened consumer spending, impacting JD.com’s market standing.

At th same time, facing tough competition from industry giants like Alibaba (NYSE: BABA), JD.com has lagged. The company reported muted first-half results in 2023, aligning with subdued performance in many other Chinese technology stocks. Aggressive price wars among domestic e-commerce rivals further intensified the challenges JD faced.

Beyond industry dynamics, JD.com battled external factors, including the government’s zero-COVID policies, regulatory crackdowns, and China’s domestic property market woes. Additionally, JD’s closure of sites in Indonesia and Thailand and an investment in a budget-conscious subsidiary indicated the company’s acknowledgment of existing challenges.

By press time, JD.com was trading at $27.59, representing YTD losses of about 52%. 

The highlighted stocks underscore the contrasting nature of the market in 2023. As we enter 2024, there is potential for some stocks to recover, given the Federal Reserve’s signaling of easing specific monetary policies. In fact, some stocks are already attempting to lead the market in an end-of-year rally, anticipating an interest rate cut.