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Top Stock Picks for Investors Focused on Long-Term Growth
Investors can often simplify their choices by purchasing stocks in well-established companies that build wealth over time. These stocks generally offer more safety, particularly if they have not yet reached the peak of their growth potential. Fortunately, there are numerous stocks in the market that meet this criterion, many of which have flourished through advancements in artificial intelligence (AI).
Analysts Recommend Three Promising Stocks
Three analysts from The Motley Fool have recommended stocks that exemplify this growth strategy. These large-cap stocks are not only leaders in the sectors they helped transform but also have solid plans to maintain their growth trajectories for years to come.
Image source: Getty Images.
Amazon Expands Beyond E-Commerce
Jake Lerch (Amazon): My choice is Amazon (NASDAQ: AMZN). When considering stocks with long-term wealth-driving potential, I focus on companies that have multiple avenues for generating success. Diversification is essential, and Amazon checks that box with its various business segments.
The company is most recognized for its expansive e-commerce platform, but it has much more to offer. Notably, the Amazon Web Services (AWS) unit is the largest cloud services provider globally, generating over $100 billion in annual revenue and poised for even greater growth as AI fuels increased spending on data centers.
Additionally, Amazon’s advertising segment produced over $56 billion in revenue in 2024, making it a significant player in the booming digital advertising market.
Some of Amazon’s segments, like its robotics and AI initiatives, currently generate less revenue but have significant future potential. The company already employs nearly one million robots in its logistics operations, suggesting that as it scales this technology, profit margins could improve.
Moreover, lessons learned from its robotics endeavors could position Amazon as a leader in AI-driven robotics, potentially allowing it to create a new revenue stream by providing AI robotics solutions to other companies.
In summary, Amazon’s diverse business portfolio is one of its biggest strengths. Investors looking for long-term buy-and-hold options should certainly consider Amazon stock.
Taiwan Semiconductor: A Leader in AI Chip Manufacturing
Will Healy (Taiwan Semiconductor): When it comes to stocks advancing the AI revolution, Taiwan Semiconductor (NYSE: TSM) is often considered one of the most critical players. The Taiwan-based semiconductor giant gained a technological edge in recent years as more chip design companies have opted to partner with external fabrication plants.
Grand View Research projects an 8% compound annual growth rate (CAGR) for the semiconductor industry through 2030, amplified by a 29% CAGR in the AI chip segment, which is likely to benefit TSMC.
TSMC has become a favored partner for major companies such as Apple, Nvidia, and Qualcomm. So advanced are its manufacturing capabilities that even Intel, traditionally self-sufficient, has turned to TSMC to produce its most sophisticated chips. This efficiency has led TSMC to control 67% of the foundry market share by the end of 2024.
Looking ahead, TSMC plans to invest around $40 billion in capital expenditures in 2025 to expand capacity in response to the soaring demand for advanced chips, including plans for additional fabrication facilities in Arizona. This aims to diversify its manufacturing away from politically sensitive Taiwan.
The strong chip demand led TSMC to report nearly $26 billion in revenue during the first quarter of 2025, reflecting a 42% yearly increase and comprehensive income of nearly $12 billion, up 47% year-over-year. As operating expenses rose slower than revenue, TSMC’s financial position looks strong.
Furthermore, TSMC’s stock trades at a price-to-earnings ratio of 25, presenting an attractive valuation given its rapid revenue growth, despite any geopolitical tensions that may have influenced its stock performance.
Alphabet: Resilience Amidst Changing Market Dynamics
Justin Pope (Alphabet): Technology giant Alphabet (NASDAQ: GOOGL) continues to underpin its dominance in digital advertising and other areas despite concerns about competition.
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Alphabet’s Strong Performance Amid Competition from AI Innovations
(NASDAQ: GOOG), Google’s parent company, remains a compelling choice for long-term investment.
As AI technology, particularly ChatGPT, attracts attention, concerns are growing that it might challenge Google’s successful search engine. ChatGPT reported 5.1 billion web and mobile visits last month, but Alphabet still posted a 10% year-over-year growth in Google Search ad revenue for Q1 2025. Although it’s prudent to watch emerging threats, Google Search continues to thrive.
Broader Developments at Alphabet
Focusing solely on Google Search may cause investors to overlook other significant progress at Alphabet:
- The company has launched Gemini 2.5, its latest AI model.
- More than 1.5 billion monthly users engage with AI-driven overviews in search results.
- Alphabet has achieved over 270 million paid subscriptions across its platforms, including YouTube and Google One.
- Google Cloud saw a remarkable 28% increase in revenue and over 140% growth in operating income in Q1 2025.
- Waymo is now conducting over 250,000 weekly autonomous rides, a fivefold increase compared to last year.
While ad revenue from Search has traditionally been a cash cow for Alphabet, other growth avenues can mitigate potential impacts from AI competitors. Analysts project that Alphabet will achieve an average annual earnings growth of 14.9%, a decline from over 17% a year ago. This suggests the market anticipates a slowdown in growth.
Nonetheless, Alphabet’s current share price reflects a P/E ratio under 19. This valuation is appealing for a global technology leader, even amid slower growth expectations. The market’s pessimism towards Alphabet may present a valuable opportunity for long-term investors.
Observations on Market Sentiment
Investor perceptions seem to have shifted too negatively, potentially creating an advantageous scenario for those willing to invest now. Long-term outcomes for Alphabet may prove beneficial, especially as the company’s diverse offerings strengthen its market position.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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