Growth stocks have been the driving force in the market for the past five years, and there is no reason to think they won't continue to lead the market over the next five.
Let's look at five monster growth stocks to buy now for the next five years.
Image source: Getty Images.
1. Palantir
Palantir Technologies (PLTR -1.76%) isn't chasing to make the next best artificial intelligence (AI) model. Instead, it has become the go-to platform for organizations trying to make sense of massive, messy data. Its Artificial Intelligence Platform (AIP) organizes information into an "ontology," giving AI models the context they need to produce actionable insights. This unique approach is paying off, and turning the company into one of the most important players in AI.
The company's success is evident in its results, with revenue having now accelerated for eight straight quarters. Its U.S. commercial revenue nearly doubled last quarter, and the customer base grew by 43%. Government work remains strong as well, highlighted by a recent 10-year, $10 billion Army contract. Best of all, many commercial clients are still in the early stages of using AIP, which means usage can expand for years.
While its stock is not cheap, Palantir has just an enormous opportunity ahead, as AIP becomes almost like an AI operating system.
2. Amazon
Amazon (AMZN 0.25%) is much more than just an e-commerce company: It's an AI and robotics leader that has built one of the most sophisticated logistics networks in the world. Its warehouses now have more than 1 million robots that can do such things as detect product defects, handle odd-shaped packages, and even repair themselves. Meanwhile, DeepFleet, its AI coordination system, helps these robots move products faster and more efficiently, without running into each other.
The company is also using AI in a variety of ways to help cut down on delivery times and miles. This includes optimizing routes, determining the best warehouses to store items, and helping drivers find difficult-to-locate addresses in places like large apartment complexes. These improvements are helping Amazon become more efficient and save costs. This could be seen in its Q2 results, with its North America operating income up nearly 50% last quarter on only 11% revenue growth.
Meanwhile, the company remains a cloud computing leader with Amazon Web Services (AWS). The segment is both its most profitable and fastest growing, as customers use its tools, such as Bedrock and SageMaker, to develop and deploy their own AI models and apps on its infrastructure. Meanwhile, Amazon has developed its own custom AI chips to help create a cost and performance advantage.
With an increasingly efficient e-commerce business and a leading cloud platform, Amazon continues to have strong long-term growth potential.
3. Alphabet
Alphabet (GOOGL -0.18%) (GOOG -0.26%) is starting to shift the narrative on how AI will impact its business. It remains the dominant player in search with a huge distribution advantage with its Chrome browser and Android smartphone operating system. Its AI Overviews are reaching billions of users each month now, and its newer AI mode is starting to gain traction. This is leading to solid revenue growth for its primary business.
Meanwhile, its cloud computing unit, Google Cloud, has been a standout, with revenue up 32% and operating profit more than doubling last quarter. Similar to AWS, companies are flocking to its platform to build out and run AI models and apps on its infrastructure. Meanwhile, the company's Tensor Processing Units (TPUs) are gaining traction, with the AI chips helping customers run AI workloads more cost-effectively.
Throw in YouTube, the Waymo robotaxi service, and investments in quantum computing, and you have an innovative company with a lot of potential growth drivers. Those are exactly the types of traits you want to see in a stock you plan to hold for five years or more.
4. E.l.f. Beauty
E.l.f. Beauty (ELF 6.29%) is looking to go on the offensive following its acquisition of Hailey Bieber's Rhode brand. The prestige skincare and cosmetics brand generated more than $200 million in online sales over the past 12 months, selling only 10 products. The brand is set to launch in Sephora stores this fall across the U.S., Canada, and the U.K., and e.l.f. will use its retail expertise to further expand Rhode's distribution footprint in the coming years.
E.l.f. is also in the midst of strong international expansion for its namesake brand. This was evident last quarter, with international sales up 30%. And while the company is dealing with tariff issues in the U.S., it is still seeing solid performance in its key retail channels like Target, while it has recently seen success after launching at Dollar General.
With Rhode now in the fold, look for e.l.f. to see strong growth over the next five years.
5. Dutch Bros
Dutch Bros (BROS 3.73%) is one of the most promising restaurant growth stories in the U.S. The company recently passed 1,000 locations and is on track to reach 2,029 by 2029. The coffee shop's drive-thru-only model is capital-light, allowing new stores to open quickly and achieve fast payback.
While many restaurant operators reported disappointing same-store sales growth in Q2, Dutch Bros was not one of them, with its comparable store sales up 6.1% on a 3.7% increase in transactions. That's impressive in the current environment, but its biggest same-store sales driver may still yet to come: food.
Dutch Bros is currently testing new hot food items in select stores, with great success. It's missed out on sales during the important breakfast daypart by not offering food, but this will begin to change in the coming years.
Between new store expansion and its food opportunity, this is a stock to own over the next five years.
