Stocks Set for a Second-Half Comeback After a Wild Start to 2023

The Rollercoaster Ride of Stocks in 2023

The first half of 2023 has been a volatile period for stocks and investors alike. After some early setbacks, the three major indexes—the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite—have all managed to push into positive territory. However, this turnaround follows several challenging months marked by concerns over President Donald Trump’s import tariff plans and their potential impact on the economy, corporate earnings, and stock performance.

Early in the year, fears of escalating tariffs especially targeted China, which caused these indexes to dip. Positive developments such as initial trade agreements and strong earnings reports have since helped calm investors and fuel a market rebound. Despite this, some growth stocks, particularly in the artificial intelligence (AI) sector, have struggled and are on track for a first-half decline. Below, we examine two stocks that could stage a strong comeback in the second half of the year.

1. Apple (AAPL)

Apple faced significant pressure as tariff discussions unfolded. Since much of its iPhone production occurs in China, a primary target of the tariffs, investors worried about potential cost increases. Although electronics were temporarily exempted, the threat of a 25% tariff on imported iPhones remains a looming concern. Apple has responded by moving some manufacturing to India, but that market also has tariff risks.

These uncertainties have pushed Apple’s stock down roughly 20% so far this year. Yet, there are solid reasons to anticipate a recovery in the months ahead. The administration is unlikely to take steps that would severely damage one of the United States’ most valuable companies. Early trade deals with the U.K. and China show signs of flexibility, suggesting compromises that support tech sector growth.

Apple’s strong financial position adds to its resilience. With over $48 billion in cash and marketable securities, the company has resources to weather challenges. Additionally, its services segment—covering data storage, digital entertainment, and more—is steadily growing, leveraging its immense installed device base. This revenue stream has hit record levels and is expected to continue expanding.

Currently, Apple shares trade at about 27 times forward earnings estimates, down from over 35 times late last year. This valuation drop creates room for upside if good news emerges, making Apple an attractive option for investors seeking value in the tech sector.

2. SoundHound AI (SOUN)

SoundHound AI specializes in voice AI technology, powering applications in automotive systems and restaurant ordering, among others. Despite a 150% gain over the past year, SoundHound’s stock has plunged 50% in 2023. This decline may present a buying opportunity rather than a warning sign.

Market sell-offs of young growth companies during uncertain economic times are common. Investors often lock in gains or reduce exposure when expansion slows. However, SoundHound’s latest earnings tell a different story. The company reported a 150% revenue increase last quarter, reflecting rapid customer base growth across multiple industries.

Diversification across sectors reduces risk, ensuring the company isn’t overly dependent on any single market. SoundHound’s patented technology translates speech directly into meaning without the intermediate speech-to-text step, improving speed and accuracy. With revenues hitting $29 million last quarter and the AI voice market projected to reach $140 billion, SoundHound stands positioned for further growth.

As economic uncertainty fades and SoundHound continues to expand, its stock could see meaningful gains in the second half of 2023.

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