The Best-Performing Stocks Of 2023

The U.S. stock market finished 2023 strong, with the S&P 500 closing out the year with an 11.7% rally in December. Overall, the S&P 500, which, with its 500 leading companies across 11 economic sectors, is considered a benchmark for not only the health of the stock market, but the United States economy overall, grew by 24%. In total, according to MarketWatch's analysis, 65% of the 500 S&P stocks finished higher for the year. And among those, the best-performing stocks for the year were Nvidia, Meta Platforms, Royal Caribbean Group, Builders FirstSource, and Uber.

Inclusion in the S&P 500 requires companies meet specific criteria related to market capitalization ($12.7 billion minimum, adjusted to start 2023), liquidity, and earnings, and the stock market index undergoes quarterly updates, better known as rebalances, based on company performance. Basically, you have to continuously prove you belong in the 500. As for 2023, while 65% of the stocks were up, according to Torsten Slok, partner and chief economist at Apollo Global Management, 72% of the S&P 500 in 2023 actually underperformed.

As for the 11 sectors represented by the S&P 500 companies (which are traded on the New York Stock Exchange, Nasdaq, or Chicago Board Options Exchange), information technology (boosted by AI stocks) led in 2023, with a 56.4% price change, followed by communication services (54.4%), consumer discretionary (41%), industrials (16%), and materials (10.2%). Here's a look at the five companies from those sectors that performed the best in 2023.

With artificial intelligence driving the narrative for the stock market's huge gains in 2023, Nvidia (NASDAQ: NVDA) was by far the story of the year, gaining 236% from January through December. To close 2023, the Santa Clara, California-based company, one of the dubbed "Magnificent Seven" stocks, had a market cap of $1.21 trillion.

Founded in 1993, Nvidia, known as the "engine of AI," is the trailblazing company that invented graphics processing units, or GPUs, a specialized computer chip essential to computing technology today — particularly AI processes (for example, it took 20,000 Nvidia processors to power ChatGPT when it launched in late 2022, via Bloomberg). Nvidia controls approximately 80% of the market.

Nvidia stock started 2023 trading at $148.59, and ended the year at $495.22 per share. And it only continues to soar in 2024, as the AI computing boom continues its surge. By the middle of January, the average price target for Nvidia was $646.54 (including an offered forecast high of $1,100), per the investment research firm Zacks Investment Research.

In 2023, Meta Platforms (NASDAQ: META) made a major comeback after CEO Mark Zuckerberg implemented company-wide changes to begin the year in response to the down year Meta endured in 2022, when its stock fell by 64% to its lowest share price in seven years ($90). To start 2023, the tech company continued its move to reduce its workforce (by more than 20,000, starting in November of 2022), and become more efficient. Zuckerberg said that 2023 would be Meta's "year of efficiency" and investors responded well to the changes.

By the end of 2023, Meta stock had gained 193.4% and was on target to surpass its previous peak of $382.18, set in September of 2021. Per The Motley Fool, analysts project 13% in revenue growth for Meta in 2024, which should mean the gains the company's stock made in 2023 will continue into the new year. To start 2023, Meta's stock was priced at $120; it closed out the year at $353.96. Said Mark Zuckerberg to Meta employees in March, "We're focused on the long term. That means investing in tools that will make us most effective over many years, not just this year."

Cruise stocks overall proved strong performers in 2023. In fact, the sixth-best performing stock, and thus just missing this list, was Carnival, which gained 130% for the year. However, Royal Caribbean (NYSE: RCL) saw the biggest gains in 2023, recording a 163% price change for the year. On January 6, 2023, you could buy a share of Royal Caribbean stock for $54.99; it closed the year on December 29 at $129.49.

It's not surprising to learn Royal Caribbean considers 2023 a banner year. Not only did it return to profitability in 2023, but it also announced its newest ship Icon of the Seas — a $2 billion cruise ship with 2,805 staterooms, 20 decks, and room to accommodate approximately 10,000 people. It's the largest cruise ship in the world, and it's booked until 2026 (via CBS News).

In addition to Icon of the Seas, Royal Caribbean Group's current fleet includes 63 cruise ships and travels to over 1,000 destinations. In 2024, RCG will also add the ships Utopia of the Seas, Celebrity Ascent, and the Silver Ray to its Silversea Cruises line. In total, this will grow its passenger capacity by 8%; further, the company is set to resume sailings to China and the Far East in the spring of 2024 (via Travel Weekly). All of which points to Royal Caribbean Group continuing to build on its 2023 success.

The construction business was down across the country in 2023. According to a summary report by ResearchAndMarkets.com, released in August of 2023, the U.S. construction industry as a whole was expected to contract by 2.5%, with the residential sector declining by 12.6%. Such projections make the fourth-best performing stock of 2023 somewhat surprising, as Builders FirstSource, the nation's largest supplier of building materials and pre-fabricated components, saw its stock grow by 157.3% in 2023.

Per Zacks Investment Research, Builders FirstSource's main business is in residential construction. Even with the down year for such projects, however, Builders FirstSource (NYSE: BLDR) was able to trend upward on the stock market due to "growth in its acquisitions, attractive product mix, and persistent digital investments," according to the Chicago-based research and money-management firm.

To start the year, shares of Builders FirstSource were priced at $67.24. By the end of 2023, the price had risen to $166.94. This said, the stock dropped back down to $106.26 on October 27, only to see it quickly bounce back. On November 3, shares were trading at $126.79; on December 1, the price was $139.28; and a week later, it reached $147.70, only 18 cents away from its previous peak on August 11.

Uber (NYSE: UBER) is another company that significantly bounced back in 2023, as the company's stock grew by 148.2% by the end of the year. Not only that, though, but Uber's performance punched its ticket into the S&P 500. On December 18, 2023, it made its debut on the benchmark stock market index, 14 years after the company was founded. To start 2023, shares of Uber were trading at $26.40. At the close of the market on December 29, the ride-hailing company's stock was priced at $61.57.

Given that Uber's stock fell by more than 50% in 2022, per CNN Business, 2023 marked quite the turnaround, as the tech company turned profitable for the first time at the end of Q2. As reported by Investor's Business Daily, CEO Dara Khosrowshahi said on the company's August Q2 earnings call, "For most of our history, profitability wasn't the first thing that came up when you asked someone about Uber. In fact, many observers over the years boldly claimed that we would never make any money." Per The Motley Fool, Uber's operating costs were $100 million less in 2023 versus 2022.