Do growth stocks pay dividends?

Most growth stocks don't pay dividends. Instead, they use excess capital to invest in the continued growth of the business. However, as companies grow larger and generate substantial free cash flow, some can continue investing in growth while returning some capital to shareholders through dividends.

What are the best stocks for growth?

The best stocks for growth are usually smaller companies with unique competitive advantages in large or potentially large addressable markets. They are typically expensive relative to their peers, but the company's upside justifies the stock price.

What is the difference between a growth stock and a value stock?

Growth stocks tend to exhibit faster, less predictable revenue growth than value stocks, which are much more predictable from year to year. Over the long run, growth stocks are expected to grow revenue and earnings much faster than value stocks. Also, growth stocks may trade on momentum, as well as on how their financial results and management outlooks compare to expectations. Value stocks, on the other hand, typically trade based on their valuation.

Are growth stocks suitable for long-term or short-term investors?

Growth stocks are best suited for investors with a long time horizon. They're inherently more volatile than value stocks, which means investors need to be able to weather the ups and downs of growth stocks for their investment thesis to play out.

Are growth ETFs a good alternative to individual stocks?

If you don't have the time or inclination to research individual stocks, a growth ETF can provide greater exposure to growth stocks than a standard index fund. The potential returns of a growth ETF might not be as high as sifting through and finding the best opportunities among growth stocks for yourself, but the time saved maintaining your own portfolio can be worth it.

Are growth stocks a good investment during economic uncertainty?

Growth stocks can still be a good investment amid economic uncertainty. However, they can see their share prices dip significantly as investors tend to avoid the riskiest investments when they're uncertain about the immediate future. If you buy a growth stock of a company with a solid balance sheet and an excellent long-term outlook in the midst of economic uncertainty, it could pay off handsomely in the long run.

Best Growth Stocks to Buy in 2026

By Adam Levy – Updated Jul 10, 2026 at 1:55 PM EST | Fact-checked by Parker Hicks

Key Points

Invest in growth stocks with strong competitive advantages and large market potential for long-term gains.
Focus on companies that dominate current trends like AI, e-commerce, and cloud computing.
Diversify across different industries and growth phases to manage the inherent volatility of growth stocks.

Investing in growth stocks can be a powerful way to build long-term wealth -- but it’s not always a smooth ride. Growth stocks tend to outperform when the market rewards future potential, but they can fall hard when investors grow more cautious.

The upside is real. So is the volatility. The goal is to invest in growth companies that can keep compounding through good and bad markets, and to build a strategy that helps you stick with them.

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Two traders looking at stocks on computer screens — Source: Getty Images.

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What is a growth stock?

A growth stock is a company expected to increase revenue and earnings faster than the broader market. Because investors are paying for future potential, growth stocks often trade at higher valuations than the average stock.

Top growth stocks to consider

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Ticker Information Table
Company name	Company ticker	Market capMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.	Industry
Meta Platforms	NASDAQ:META	$1.6 trillion	Interactive Media and Services
Shopify	NASDAQ:SHOP	$159.8 billion	IT Services
Uber Technologies	NYSE:UBER	$151.3 billion	Road and Rail
Block	NYSE:XYZ	$46.1 billion	Diversified Financial Services
MercadoLibre	NASDAQ:MELI	$91.7 billion	Multiline Retail
Nvidia	NASDAQ:NVDA	$4.9 trillion	Semiconductors and Semiconductor Equipment
Netflix	NASDAQ:NFLX	$317.8 billion	Entertainment
ServiceNow	NYSE:NOW	$112.2 billion	Software
Amazon	NASDAQ:AMZN	$2.7 trillion	Multiline Retail
Alphabet	NASDAQ:GOOG	$4.3 trillion	Interactive Media and Services

Data as of Jul 10, 2026. Showing 10 of 10 total entries.

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Meta Platforms

Meta Platforms (META +6.16%), the company behind Facebook and Instagram, is a digital advertising giant. Its investments in artificial intelligence help improve engagement and ad efficacy on its platforms while providing new avenues for growth with its own large language models.

Shopify

Shopify (SHOP -0.49%) provides the backbone for e-commerce businesses of all sizes, ranging from solopreneurs to enterprise operations. Ancillary services provide growth levers as its customers' needs expand.

Uber

The ride-sharing and meal-delivery businesses are market leaders in their categories and the regions where they operate. Uber's (UBER +0.31%) network effect can drive strong margin expansion over time while protecting it from smaller competitors. Its massive two-sided network makes it a top partner for autonomous vehicle companies looking to enter the ride-sharing space.

Block

Block (XYZ -0.13%) is the company behind Square, which enables merchants to accept debit and credit card payments among other services, and Cash App, its consumer-facing finance app. Square is successfully moving upmarket to larger merchants and offering a suite of services that lock them into its ecosystem and generate recurring revenue. Cash App's popularity and expansion beyond peer-to-peer payments have created a strong, growing revenue stream as well.

MercadoLibre

MercadoLibre (MELI +2.73%) is the dominant e-commerce platform in Latin America, and it uses its scale to its advantage. It's investing heavily in its logistics network and payments platform, establishing a significant competitive advantage over smaller companies competing for the growing market. It also has a growing advertising business.

Nvidia

The company's GPUs are essential infrastructure for large language model training and inference. Nvidia (NVDA +3.90%) is expanding into new opportunities with CPUs for data centers and personal devices. It's also making strategic investments in companies to create key partnerships and ensure its position at the center of the AI build-out.

Netflix

The streaming media leader holds a massive advantage thanks to its scale with over 325 million global subscribers. That allows Netflix (NFLX -2.76%) to spend more on content than competitors while producing significant free cash flow, which it can use to return capital to shareholders or make strategic acquisitions to grow the business. Its nascent advertising business presents a new opportunity to grow revenue while attracting more cost-conscious consumers.

ServiceNow

ServiceNow (NOW -0.96%) offers a range of enterprise software solutions across IT and HR service and operations. Its early adoption of generative AI has put it in a good position to act as the center of its customers' AI implementations.

Amazon

Amazon (AMZN -0.73%) is both the e-commerce and cloud computing market leader. Its e-commerce lead is bolstered by its massive logistics network and Prime subscription, creating both customer and merchant loyalty. Its cloud computing business has been a major beneficiary of AI spending.

Alphabet

Alphabet (GOOG -0.34%) (GOOGL -0.50%) owns Google, which has seen a positive impact from AI on both its core advertising business and its rapidly growing cloud computing platform. It's also a leading developer of large language models with its Gemini family, driving demand for its cloud platform and providing a new revenue stream by offering direct access to third parties.

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How to find growth stocks

To find great growth stocks, you'll need to do a few things:

Identify powerful long-term market trends and the companies best positioned to profit from them.
Narrow your list to businesses with strong competitive advantages.
Further narrow your list to companies with large addressable markets.

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An infographic listing criteria for how to find the best growth stocks and companies on the market. — Image source: The Motley Fool.

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Identify trends and the companies driving them

Companies that capitalize on powerful long-term trends can increase their sales and profits for many years. Here are some examples, along with the companies that can help you profit from those trends.

E-commerce

As more people shop online, Amazon and Shopify are well-positioned to profit in the U.S. (and many international markets). MercadoLibre holds a leading share of the online retail market in Latin America. Despite the consistent presence of brick-and-mortar retail, e-commerce still has significant growth potential.

Digital advertising

Meta Platforms and Alphabet control the lion's share of the digital ad market. The businesses are poised to profit handsomely as marketing budgets continue to shift from TV and print to online channels.

Amazon has built a massive advertising business, which continues to expand into new formats. Even Netflix has come around to advertising to increase its subscriber base and boost its revenue.

Digital payments

PayPal (PYPL +2.17%) and Block are helping accelerate the global shift from cash to digital payment forms by allowing businesses of all sizes to accept debit and credit card transactions and giving consumers easier access to cashless payments.

Cloud computing

Identify trends migrating from on-premises data centers to cloud-based servers. Amazon and Google cloud infrastructure services help make this possible, while Salesforce (CRM +0.52%) and ServiceNow provides some of the best cloud-based enterprise software available. Artificial intelligence (AI) will require vast amounts of computing power, which cloud providers are ready, willing, and able to provide.

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Streaming entertainment

Millions are canceling their cable subscriptions and replacing them with cheaper, more convenient streaming options. As the global leader in streaming entertainment, Netflix offers a great way to profit from this trend, but it faces growing competition from other media companies such as Disney (DIS -0.55%).

Electric and autonomous vehicles

The world is shifting from reliance on gasoline to electricity for vehicle power. Tesla (TSLA +0.22%) has been the leader in the space, with its lineup of vehicles and battery technology. The Chinese company BYD (BYDDY +2.85%) has ascended rapidly to become the world's leading EV maker, thanks to its low-priced vehicles. Both EV makers have also made significant progress in developing self-driving technology for their cars.

However, Alphabet's Waymo has a clear lead in the space, offering a commercial service in several U.S. cities and completing more than 500,000 rides per week. Uber has emerged as a key partner for autonomous vehicle companies looking to deploy their fleet and maximize their capital utilization. It could be a hidden beneficiary of the growing number of self-driving cars on the road.

Artificial intelligence

Companies have recently poured billions into accelerating their AI development and applying it to their businesses. Nvidia has been a major beneficiary, as it designs the chips used to train many large language models, the foundation of generative AI.

Alphabet, Amazon, Microsoft (MSFT +0.15%), and Oracle (ORCL -2.11%) also benefit from growth in AI applications since many run on their cloud computing platforms.

The key is to invest in these trends and companies as early as possible. The earlier you get in, the more you stand to profit. However, the most powerful trends can last for many years -- even decades -- giving you plenty of time to claim your share of the profits they create.

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Prioritize companies with competitive advantages

It's also important to invest in growth companies that possess strong competitive advantages. Otherwise, their competitors may pass them, and their growth may not last long. A strong competitive advantage will help companies survive and thrive through market downturns, while those without one will struggle.

If you can identify stocks of companies with strong competitive advantages being sold off along with the rest of the market, it can be an opportunity to generate massive returns as they recover. Some competitive advantages are:

Network effects: Meta's Instagram is a prime example here. Each person who joins the social media platform makes it more valuable to other members. Network effects can make it difficult for new entrants to displace the current market share leader. Meta's 3.5 billion users across its family of apps certainly make it unlikely that a new social media company will displace it.
Scale advantages: Size can be another powerful advantage. Amazon is a great example in this category because smaller rivals will find it extremely difficult to replicate its massive global fulfillment network.
High switching costs: The expenses and difficulties associated with switching to a rival's product or service can be an important advantage. Shopify, an online retail platform used by more than 1 million businesses, is a perfect example of a business with high switching costs. Once a company begins using Shopify as the core of its online operations, it's unlikely to go through the hassle of switching to a competitor.

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Find companies with large addressable markets

Finally, you'll want to invest in businesses with large addressable markets and long runways for growth still ahead. Industry reports from research firms -- such as Gartner (IT +0.41%) and Insider Intelligence, which provide estimates of industry sizes, growth projections, and market share figures -- can be very helpful.

The larger the opportunity, the larger a business can ultimately become. And the earlier it is in its growth cycle, the longer it can continue to grow at an impressive rate.

Why invest in growth stocks?

They have high return potential.
Less demand for immediate capital returns allows management to invest in the future.
They can add diversification to your portfolio across market segments and sectors.
Participate in major economic trends.
One excellent growth stock investment can make up for a handful that don't work out.

Risks of investing in growth stocks

Growth stocks can offer excellent long-term returns, but there are no free lunches in the stock market. The cost of better returns is greater risk.

Growth stocks generally exhibit greater price volatility. That's partly due to their higher valuations. Any changes in expectations for the future are multiplied by a greater factor when valuations are high. As such, investors need to be able to stomach severe drawdowns in the value of their growth stocks.

Individual growth stocks also hold significantly more risk than individual value stocks. By their nature, growth stocks are less predictable, so an individual investment could face setbacks from poor execution, challenges scaling the business, or another company disrupting its product or market. So, growth stock investors should maintain a portfolio of companies across industries and in different phases of growth.

Growth stocks versus value stocks

Investors often split the market into growth stocks and value stocks. Where growth stocks generate revenue and earnings growth above the market average, value stocks are more mature slow-growing businesses. Value stocks can be more predictable and investors typically pay lower earnings multiples for them. The table below provides a more in-depth side-by-side comparison of growth stocks versus value stocks.

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Growth stocks versus value stocks
Growth Stocks	Value Stocks
Above-average earnings and revenue growth and expectations for continued growth.	Stable revenue and earnings growth.
High valuation relative to current earnings, revenue, and cash flow.	Low valuation relative to current earnings, revenue, and cash flow.
More volatile stock returns.	Less volatile stock returns.
Retained earnings and free cash flow go toward reinvesting in the business.	Earnings and free cash flow often returned to investors via stable and growing dividends.
Outperform during bull markets when investors are optimistic about the future.	Outperform during bear markets and inflationary periods, when the future is more uncertain.

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Investors can find success investing in either growth stocks or value stocks. There are countless examples of value investors outperforming the overall market in the long run, and just as many examples of investors focused on growth stocks. Investors may also find it valuable to hold a mix of both in their portfolios: value provides a stable base, while growth stocks offer significant upside.

Growth stocks versus dividend stocks

While some growth stocks might pay dividends, growth stocks and dividend stocks usually don't overlap. Many dividend stocks are value stocks and the same characteristics of value stocks often apply to good dividend stocks: they're more predictable and generally have lower valuations than growth stocks.

Investors can generate great returns from either type of stock. Understanding what to look for when investing in growth stocks or dividend stocks is key to getting the most from either strategy.

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How to manage a portfolio of growth stocks

Not every growth stock you buy will pan out. As such, it's best to start with small positions in multiple growth stocks. If a business's financial performance lines up with your investment thesis, you might increase your position in that stock, as you should now have more confidence in its future growth. However, if you start to see evidence that your thesis was wrong, you should start trimming your position, or possibly exit it altogether.

As mentioned, growth trends can last a very long time, so you should avoid selling a stock too early. However, since growth stocks are more volatile than value stocks, it may be smart to limit your biggest positions to a certain percentage of your portfolio. That way, a big swing in the stock price won't crater your whole portfolio.

What are the tax implications of investing in growth stocks?

Many growth stocks don't pay dividends; instead, they retain free cash flow to reinvest in the business. If that's the case, you'll only pay taxes when you sell shares of growth stocks.

You'll pay taxes on capital gains in the year you sell a growth stock. If you have other portfolio holdings that have lost value, you may be able to offset capital gains in one stock with losses from another stock. If you have more losses than gains in any given year, you can deduct up to $3,000 in stock losses from your income that year. Any excess losses are carried over to offset capital gains or up to $3,000 of income in future years.

If your growth stocks do pay some dividends, you'll owe taxes in the year they're paid. The vast majority of dividends received will be qualified dividends, which are taxed at the long-term capital gains rate.

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FAQ

Growth stocks: FAQ

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Expert Q&A on growth stocks

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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@admlvy

Adam Levy has positions in Alphabet, Amazon, Meta Platforms, Microsoft, Netflix, Salesforce, Uber Technologies, and Walt Disney. The Motley Fool has positions in and recommends Alphabet, Amazon, Block, MercadoLibre, Meta Platforms, Microsoft, Netflix, Nvidia, Oracle, PayPal, Salesforce, ServiceNow, Shopify, Tesla, Uber Technologies, and Walt Disney. The Motley Fool recommends BYD Company and Gartner and recommends the following options: short September 2026 $47.50 calls on PayPal. The Motley Fool has a disclosure policy.

Best Growth Stocks to Buy in 2026

Key Points

What is a growth stock?