Given that three out of four stocks move in the same direction as the broad market on any given day, a bull market bodes well for almost any stock pick. Not all gains are the same, though.
Some stocks are winners just by riding the bullish tide. A handful of tickers, however, actually lead bullish charges. It's these latter ones that growth-minded investors should want to own first and foremost.
With that as the backdrop, here's a close look at two high-growth stocks that will likely lead the new bull market officially underway as of a couple of weeks ago.
1. Microsoft
You certainly know the company. Indeed, software giant Microsoft (MSFT 1.82%) has arguably been the linchpin of the personal computer since the 1990s when the PC revolution first got going. Since then, most hardware and software have been developed with its Windows operating system in mind.
Veteran investors may sense, however, that Microsoft's best days are behind it. Microsoft's once-leading Office productivity software suite is no longer a market leader, for example. That honor belongs to Alphabet's (GOOG 9.96%) (GOOGL 10.22%) Google Docs.
For that matter, Microsoft's Windows continues to lose operating system market share. Microsoft's search engine, Bing, isn't exactly going toe-to-toe with Google, either. These are all telltale clues that a company is struggling to continue growing in highly saturated, slow-growth markets.
However, there's a whole side of Microsoft the average investor doesn't readily see. That's cloud computing. According to data from Synergy Research Group, Microsoft's cloud computing business now accounts for a second-best 23% of the global cloud computing market's revenue (Amazon is tops at 32%), extending gains from a share of only 18% as of 2018. That makes Microsoft's cloud computing business the world's fastest-growing one for the past five years.
In this same vein, Microsoft's server products and cloud services revenue improved 21% year over year during the three months ending in September and now makes up more than 40% of the company's total top line. That growth pace expands a long-standing streak of cloud-based growth from Microsoft. That's how the company drove overall revenue growth of 13% during the quarter in question, also extending a well-established pace of forward progress.
Data source: Microsoft. Chart by author. Figures are in billions.
And the analyst community is calling for more of the same well into the future. The consensus sales estimate for 2028 stands at $413 billion versus this year's expectation of only $243 billion. Per-share earnings are projected to swell from $11.27 this year to $19.82 per share five years from now. That's annualized growth of 11% and 12%, respectively, largely driven by the cloud computing market's projected growth. Mordor Intelligence suggests the global cloud business will swell from $680 billion this year to over $1.4 trillion in 2029.
Of course, Microsoft is already a highly regarded company and stock. This growth should easily add to the already bullish tailwind blowing the stock forward.
2. Alphabet
The other name likely to help lead the stock market's newfound bullishness? Google parent Alphabet.
As is the case with Microsoft, it's easy to presume Alphabet's highest-growth days are all in the past. And maybe they are. Search engines are everywhere and already fully utilized, after all.
Market research outfit Meltwater reports global growth in the number of regular internet users has been slowing for a few years now, sliding to an outright crawl last year when the figure eclipsed 5.1 billion. That's roughly two-thirds of the global population, not leaving a whole lot more room for additional easy growth. Of course, this presents clear challenges to Alphabet's flagship search advertising business.
However, Alphabet is so much more than Google these days. The company's cloud computing arm and even YouTube are quickly becoming powerhouse profit centers in their own right.
As for YouTube, as tough as it might be to believe, that platform actually serves up more streaming content than dedicated streaming players like Netflix and Walt Disney. Numbers from television viewership ratings agency Nielsen say YouTube accounted for 8.5% of last month's total streaming view time within the United States versus Netflix's 7.7% and Walt Disney's 4.5% -- combining Disney+ and Hulu!
Each of these individual streams played via YouTube, of course, drives ad revenue. In this vein, YouTube's advertising revenue of nearly $8.0 billion during the quarter ending in September was up 12% year over year.
Google's cloud services arm is doing just as well. In fact, in some ways, it may even be doing better. Its third-quarter year-over-year top-line growth pace of 22% -- from $6.9 billion to $8.4 billion -- pushed the operation out of the red and into the black for a third quarter in a row. Now fiscally viable, it's much easier for Alphabet to think and invest more aggressively in its cloud computing business we already know is poised for several more years of good growth.
With all of that said, it's not like Google's ad business is exactly reeling. After something of a lull a year ago, its sales improved a healthy 11% year over year for the quarter ending in September.
As long as the world relies on the worldwide web and uses search engines to navigate it, Alphabet's biggest arm will remain a major cash cow. After all, the need for advertising services is never going away. If anything, a bull market stemming from economic strength will pump up demand -- and pricing power -- for advertising mediums like Google.
