Successful investing isn't about chasing quick wins. Instead, it involves buying stakes in high-quality businesses with durable moats, strong financials, and the ability to adapt to emerging trends -- and holding those stakes for the long term. These companies can reward shareholders across generations.
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Here are two such stocks that have the potential to create generational wealth.
1. Alphabet
Alphabet (GOOG +0.08%) (GOOGL +0.14%) is currently targeting online search, cloud computing, and artificial intelligence (AI) -- three markets that are already worth hundreds of billions of dollars each, and that have all been expanding rapidly for several years. With a market capitalization of over $3 trillion, $95 billion in cash on its books, and $66.7 billion in trailing 12-month free cash flow, Alphabet boasts exceptional financial strength. This enables it to build cutting-edge AI infrastructure, scale up its Waymo autonomous driving project, invest in other tech projects, and still have money to reward its shareholders with dividends and share repurchases.
NASDAQ: GOOG
Key Data Points
AI is already helping Alphabet fend off competition for its flagship Google Search offering. With new features such as AI Overviews (AI-generated summaries with links to their sources) and AI Mode (an end-to-end AI search experience), the company is reshaping how its users look for information. AI Overview now reaches over 2 billion monthly users and generates nearly 10% more queries when shown. AI Mode -- which is still rolling out in other countries -- has quickly scaled to 100 million monthly active users in the U.S. and India.
YouTube, which has led the U.S. streaming market by watch time for over two years, has diversified Alphabet's revenue mix by combining a dominant advertising engine with a fast-growing subscription business across Premium, Music, and YouTube TV. With Shorts engagement exceeding 200 billion daily views and YouTube ads viewed on connected TVs that let viewers shop directly from the ads they see, YouTube is positioned to become an even larger driver of Alphabet's revenue.
Google Cloud is also emerging as a significant catalyst for growth. In the second quarter, Google Cloud's revenue grew 32% year over year to $13.6 billion, while operating margin expanded from 11.3% to 20.7%. With an annual run rate of over $50 billion and a $106 billion backlog at the end of the second quarter, Google Cloud is playing a crucial role in driving enterprise AI adoption. Alphabet has also integrated its Gemini-powered agents across its Cloud products, and many large enterprises are already using them to improve their efficiency, security, and software quality.
Alphabet's full-stack AI strategy is also proving to be a significant competitive advantage. The company offers GPUs, its own custom TPUs (tensor processing units), and advanced AI models and tools, such as the Gemini 2.5 family of hybrid reasoning models on its leading global network of AI-optimized data centers.
Between those powerful businesses and the long-term growth potential of its Waymo business, its wearable AI devices, and its emerging subscription services businesses, Alphabet has built a robust and diversified ecosystem.
Despite the many pros, Alphabet trades at 21.4 times forward earnings, which is lower than the S&P 500's multiple of 23.7. Based on all these factors, Alphabet looks like a stock worth buying now and holding for the long term.
2. Meta Platforms
Meta Platforms (META +0.33%) remains a dominant force in the social media and digital advertising landscapes. With over 3.4 billion people using at least one of its applications daily, the company enjoys unmatched reach, which is helping drive user engagement and monetization.
NASDAQ: META
Key Data Points
The strength of the business is all too obvious. In the second quarter, its revenues grew 22% year over year to $47.5 billion. Operating margin increased by 5 percentage points to 43%, while free cash flow was $8.5 billion. The company distributed $1.3 billion in dividends and spent $9.8 billion on share repurchases while continuing to invest aggressively in its AI initiatives.
Artificial intelligence is quickly becoming Meta's central growth engine. The company formed Superintelligence Labs, bringing together its Foundations team (focused on foundational AI models), product team, and the Facebook AI Research team to accelerate next-generation AI development. It is also investing heavily in building several multigigawatt-scale data center clusters to dramatically increase its capacity to train and deploy AI models. These include the Prometheus cluster, which is scheduled to become operational in 2026, and Hyperion, which is expected to scale up to 5 gigawatts within the next few years.
These efforts are also showing results. While its Andromeda model helps retrieve and display the most personalized and relevant advertisements for each user, the new Generative Ads Recommendation system (GEM) helps rank the best ads for users after retrieval. These AI-powered initiatives helped improve ad conversions by nearly 5% on Instagram and 3% on Facebook.
Besides offering them better ad targeting, Meta is also supporting advertisers with AI-powered creative tools. Approximately 2 million advertisers are now using Meta's generative AI features to create more impactful and efficient ad campaigns. Since these tools are especially valuable for smaller advertisers with limited budgets, they are helping to expand Meta's advertiser base.
Its virtual AI assistant, Meta AI, already has over 1 billion monthly users across its applications. Growing adoption of that software opens the door to new monetization avenues in content discovery, search, and messaging.
Meta currently trades at about 28.5 times forward earnings, which is not an inexpensive valuation. Additionally, the company is exposed to increasing regulatory and legal risks in Europe. Finally, some are concerned about its massive planned capital expenditures for 2025 and 2026. However, considering its scale, financial strength, and ambitious AI strategy, the stock could still prove to be an exceptional generational play for those who buy it now.
