While many wonder what 2026 has in store, it's important for long-term investors not to lose sight of the big picture.
Whatever happens -- recession, macroeconomic concerns, a market crash -- the formula to earn exceptional returns over the long run will remain the same. It comes down to buying shares of companies with strong businesses, capability for excellent moats, and attractive growth prospects. These companies can navigate whatever will come in the next 12 months and still perform well over the next five years and beyond.
Two great companies along those lines are MercadoLibre (MELI 6.80%) and Microsoft (MSFT 0.20%). Here's more on these two corporations.
Image source: Getty Images.
1. MercadoLibre
MercadoLibre started 2025 on a strong note, but the company's shares declined over the last six months of the year. Entering 2026, though, it remains a strong buy-and-hold option due to its position in the Latin American e-commerce market.
True, MercadoLibre is dealing with competition in its home stadium, so to speak, notably from Shopee, an e-commerce platform owned by Singapore-based Sea Limited. One of Shopee's appeals, as management points out, is its ability to offer lower prices in markets where it operates, including Brazil, the largest economy in Latin America.
That's a problem for MercadoLibre. However, the company is adapting. MercadoLibre has extended various offerings that should allow it to remain competitive, including drastically decreasing minimum transaction amounts for free shipping, thereby making far more orders eligible.
NASDAQ: MELI
Key Data Points
Furthermore, a vast, underpenetrated market in Latin America remains, as MercadoLibre points out.
Even with more competition, the continent, which has seen one of the fastest rates of e-commerce growth in recent years, presents tremendous long-term opportunities, especially to this well-established player with a presence across multiple countries. There are also other potential growth avenues for MercadoLibre. One of the more exciting, in my view, is advertising. Being the leading platform in the region has its perks, including a vast audience to monetize.
Advertising is a higher-margin opportunity than MercadoLibre's core e-commerce business. So, even if its initiatives to fend off competition from Shopee pressure margins in the short run, it will pay for itself in the long run as advertising revenue grows and helps boost margins and earnings.
For all those reasons (and more), I remain bullish on MercadoLibre's prospects. The stock remains a buy for investors willing to hold on to it for a decade or more.
2. Microsoft
Microsoft had a somewhat similar experience -- a strong first half of 2025, but a weaker second half of the year. It wasn't because its financial results suddenly worsened. In fact, thanks to cloud computing and artificial intelligence (AI), the company seems to be firing on all cylinders. One of the issues some investors have is the increasing investment in AI. Will this heavy spending pay off?
If it doesn't, Microsoft's revenue growth might dip while expenses remain high, leading to lower profits and margins. That's a fair concern. However, it's worth highlighting, once again, the strength of Microsoft's cloud business. The company's Azure holds the second-largest market share. It is growing much faster than its competitor, Amazon Web Services (AWS).
Azure revenue during the company's 2026 first quarter (ended Sept. 30, 2025) jumped 40% year over year, growing twice as fast as AWS during the same period. Meanwhile, Microsoft ended the period with $392 billion of cloud contracted backlog, up 51% year over year.
NASDAQ: MSFT
Key Data Points
Microsoft's partnership with OpenAI, which allows the tech giant to offer some of the leading models on the market to its customers through the cloud, grants it a significant advantage. Even with rapidly growing capital expenditures, Microsoft appears to be well-positioned to profit from the booming cloud and AI industries over the next decade.
That's before considering other aspects of its business. Microsoft may have plenty of competition, but it boasts a strong competitive advantage thanks to switching costs.
Lastly, the stock is one of the best dividend payers among the "Magnificent Seven." Its forward yield is unimpressive at 0.8%, but Microsoft has increased its payouts by almost 153% in the past decade. Microsoft is a top pick for growth and income investors to hold through 2035.
