There is a notion out there that investing is hard. But it doesn't have to be. Regularly buying shares of growing companies is a simple but proven strategy for building lasting wealth in the stock market.
Here are two great growth stocks to buy and hold for the next 10 years.
1. Microsoft
Microsoft has emerged as one of the top beneficiaries of the artificial intelligence (AI) boom. The familiarity that many consumers and businesses have with its software is a key competitive advantage that will allow Microsoft to quickly scale and monetize the AI services it is developing.
CEO Satya Nadella recently stated that AI will become a key part of every PC in 2024, which plays to the company's strength. The company has already launched Copilot, available on over 75 million Windows 10 and Windows 11 PCs, which will become a fundamental part of how users search and get things done in Office 365 and Windows.
When it comes to cloud computing, Microsoft is experiencing a growing demand for enterprise AI services. Revenue from Azure and other cloud services grew 30% year over year last quarter, with AI services contributing six percentage points to that increase.
Analysts expect Microsoft's earnings to grow 16% on an annualized basis over the next five years. Its dominant market share in desktop operating systems, in addition to its budding cloud services business, puts Microsoft in a great position to deliver returns to investors as AI takes off.
2. Nvidia
Nvidia has delivered awe-inspiring returns over the last decade, but it's still growing like a rising star. Data centers and major cloud service providers like Microsoft are ramping up investment in graphics processing units (GPUs) in order to build the infrastructure required for AI. Nvidia has been growing revenue at triple-digit percentage rates over the last year, but it's just getting started.
Demand for its GPUs is being driven by the investment in generative AI and large language models across several industries, use cases, and countries around the world. Looking out 10 years, this could translate to hundreds of billions in annual revenue for Nvidia.
The company is expected to report revenue of $24 billion in the fiscal first quarter alone, but management sees a data center infrastructure market that could be worth multiples of that within the next five years. Nvidia is launching a new version of its popular H100 GPU for data centers in the fiscal second quarter. Strong demand for its chips is expected to grow revenue by 81% this year, based on Wall Street's estimates.
Investors shouldn't buy the stock expecting it to double every year, but the size of Nvidia's addressable market shows a stock that could still outperform over the next 10 years. Nvidia's ability to adapt its core processing technology to many use cases, including self-driving cars, gaming, data centers, and AI makes it a great tech stock to buy and hold for the long term.
