Investors have been on a roller-coaster ride in recent years, as the end of the COVID-19 pandemic sent many stocks skyrocketing in 2021. Then, macroeconomic headwinds the following year triggered a sell-off among some of the world's most valuable companies.
The volatility has highlighted the importance of grounding your portfolio with shares in historically reliable growth stocks. Doing so can help protect gains over the long term and safeguard your investments against temporary headwinds.
The tech industry is an excellent place to find such stocks, thanks to the innovative nature of the sector. Some of the biggest names in tech have a reputation for regularly outperforming the market, proven by the 389% rise of the Nasdaq-100 Technology Sector index over the last decade. Meanwhile, the Nasdaq Composite index has increased by 273% in the same period.
Here are two growth stocks that could beat the market over the next 10 years.
1. Apple
An economic downturn in 2022 caused reductions in consumer spending across tech, with repeated declines triggering a sell-off. The challenging conditions brought to light the vulnerability of some businesses and the strength of others.
Throughout the year, Apple (AAPL 0.50%) consistently outperformed the market and became a haven for investors. The chart below illustrates how Apple and Microsoft (MSFT -0.11%) were the only companies among the five biggest names in tech to beat the Nasdaq Composite index in 2022.
Data by YCharts.
Apple has long had a reputation on Wall Street for stellar stock growth. The tech giant's shares soared 244% since 2018, more than any of the companies in the chart above.
Popular devices, such as the iPhone, have built up immense brand loyalty with consumers and led the company to achieve leading market share across its product lineup. Consistent quality and an easy-to-use design language allow Apple to charge a premium for its offerings, bolstering its business amid economic hurdles.
The company has had a challenging year, with macroeconomic headwinds causing revenue declines in many of its product segments in the third quarter of 2023. As a result, Apple's stock is down 8% since the start of August.
However, the company's dominating position in tech and history of growth continues to make its stock a compelling buy and one likely to beat the market over the next decade.
2. Microsoft
Microsoft is the second-most-valuable company in the world, just after Apple, so it's hard to go wrong investing in the tech giant. The company is home to potent brands such as Windows, Office, Azure, Xbox, and LinkedIn, which have contributed to its stock soaring 198% over the last five years.
Moreover, a boom in artificial intelligence (AI) this year has played in Microsoft's favor. The company was an early investor in the industry, investing $1 billion in ChatGPT developer OpenAI in 2019. The partnership has allowed Microsoft to procure exclusive licenses on several of the start-up's AI models and beat competitors like Amazon and Alphabet to the market.
Microsoft has used OpenAI's technology to bring AI upgrades to many of its services, including Word, Excel, Azure, and Bing. The company's push into the high-growth sector has paid off in the form of cloud growth.
In fiscal 2022, revenue from server products and cloud services increased 19% year over year, mainly driven by Azure. As the AI market develops, Microsoft is well-positioned to profit substantially with the help of Azure and its collaboration with OpenAI.
Since 2019, Microsoft's revenue increased by 68%, while operating income has risen 106%. The company has proven to be one of the most reliable growth stocks, thanks to its commitment to innovation and investment in developing markets. Its history of offering investors consistent gains and resilience during last year's economic downturn makes Microsoft stock a screaming buy to hold over the next 10 years.
