Better Tech Stock in 2023: Apple vs. AMD

Tech stocks have been on the rise since Jan. 1, beginning to recover from the steep declines they suffered in 2022. Investors have rallied around Apple $Apple(AAPL.US)$ and Advanced Micro Devices $Advanced Micro Devices(AMD.US)$ , with both companies' shares up more than 10% in the new year.

Apple has a variety of new products launching this year, including one that will see it venture into a high-growth market. Meanwhile, AMD's booming data center business recently got a huge leg up on Intel, one of its biggest competitors.

Apple and AMD would likely be an asset to any portfolio, offering substantial and consistent long-term growth, with both companies' stocks enjoying triple-digit gains over the last five years. But if you're only looking to add shares of one of these tech specialists right now, you'll need to know which is the better buy in 2023. Let's find out.

Apple and AMD both have excellent long-term outlooks, with solid positions in some of the world's most lucrative markets. In order to determine which might be the better buy today, we can look at a few valuation metrics that help indicate whether a company's stock price aligns with its financial performance. Comparing price-to-earnings ratios, Apple's P/E ratio of 23.4 makes its stock a better bargain than AMD's P/E ratio of 43.4. Using this metric alongside the price-to-free cash flow metric, which helps gauge how much cash a company has on hand relative to its stock price, we can see that the iPhone company has clearly overcome an economically challenging year in better form (Apple's P/FCF ratio is 21; whereas, AMD's is 31.3).

Ultimately, Apple is currently in a more stable, reliable position. This makes it the better tech stock in 2023. However, AMD is still a company to keep a close eye on and potentially invest in at the next opportunity.