Share prices of Applied Materials (NASDAQ: AMAT) are down over 30% this year, roughly in line with the average return for semiconductor stocks in 2022. Investors are fretting over a possible recession in 2023, and some parts of the chip industry (specifically, the parts that rely on consumer purchases of smartphones and PCs) are already in a cyclical downturn.  

With this as a backdrop, Applied Materials' business is doing just fine. The stock has already sharply rallied off of its low in October, but there could be plenty more left in the tank because the company predicts a strong start to 2023.

Chip stock performance headed into 2023 isn't telling the whole story. Yes, consumer electronics are in a deep downturn, but the chip industry overall is exhibiting resilience and is far from a widespread collapse. On the contrary, cloud computing, AI, automotive, and industrial demand are still strong, and lots more demand is coming in the years ahead. Chip companies and analysts alike see global annual chip sales going from over $600 billion in 2022 to more than $1 trillion a year by 2030. To meet that future demand, new chip manufacturing facilities (fabs) need to be built right now.

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Source Fool.com