Investors Eye Long-term Gains Amid Current Market Volatility
Market volatility has prompted some investors to cash in and secure profits. However, successful investing often requires enduring short-term fluctuations for long-term rewards. The S&P 500 (SNPINDEX: ^GSPC) has recovered from earlier losses this year, illustrating the risk of selling at a low point.
For those willing to hold investments for at least 20 years, stocks like Amazon (NASDAQ: AMZN), Shopify (NASDAQ: SHOP), MercadoLibre (NASDAQ: MELI), and SoFi Technologies (NASDAQ: SOFI) may deliver significant returns.
1. Amazon: Dominating E-commerce and Cloud Computing
Amazon leads in e-commerce and cloud computing, holding about 40% of the U.S. e-commerce market and 30% of the global cloud market. Both sectors are experiencing organic growth, bolstering Amazon’s performance.
Shoppers recognize Amazon as the top e-commerce platform, and the company is heavily investing to maintain its position. Management now sees generative AI, particularly through Amazon Web Services (AWS), as a primary growth driver for the next several years.
Amazon plans to invest over $100 billion by 2025 to expand AWS, which had a 17% year-over-year sales increase in Q1, achieving an annualized revenue run rate of $117 billion. With generative AI, this figure is expected to rise.
CEO Andy Jassy stated, “We thought AWS had the chance to ultimately be a multihundred-billion-dollar revenue business. We now think it could be even larger.” Additional revenue streams from advertising and streaming further bolster Amazon’s growth prospects.
2. Shopify: A Leader in E-commerce Services
Shopify focuses on providing e-commerce services rather than selling products directly. Its gross merchandise volume (GMV) rivals that of Amazon, highlighting its crucial role in the e-commerce ecosystem.
Shopify benefits from the growth of e-commerce, which accounted for 20.3% of retail sales in 2024 and is projected to rise to 23% by 2027. This growth leaves significant room for expansion, translating to potential trillions of dollars.
By targeting both small and large businesses, Shopify has evolved from a simple platform to a comprehensive omnichannel service provider. Increased international sales, which made up only 30% of total sales in Q1, indicate further growth potential.
3. MercadoLibre: Disrupting Latin American Markets
MercadoLibre operates similarly to Amazon, focusing on e-commerce while also venturing into fintech. With strong growth metrics, such as a 40% GMV increase year-over-year, it is well-positioned in fast-evolving Latin American markets.
Latin America remains behind in digital adoption, with 85% of sales still offline. This provides MercadoLibre a wealth of opportunities, as increased digital penetration is inevitable.
By attracting new visitors and enhancing purchase frequency, MercadoLibre continues to innovate, evident in its recent initiatives like a free streaming service funded by its growing ad revenue.
4. SoFi: Revolutionizing Banking
SoFi is a digital banking disruptor catering to young professionals. It offers an array of financial services online, appealing to tech-savvy consumers.
This platform, originally focused on lending, now features bank accounts and investment tools, driving profitability through low-cost, fee-based products.
As interest rates decrease, lending revenue rose 25% year-over-year in Q1, while the financial services segment grew over 100%, yielding a contribution profit increase of 299%. SoFi is rapidly expanding its customer base and aims to become a top-10 U.S. bank over the next 20 years.
Should You Invest $1,000 in Amazon Now?
Before investing in Amazon, note that the Motley Fool Stock Advisor recently identified its top 10 stock picks, which did not include Amazon. Historically, recommended stocks like Netflix and Nvidia have yielded substantial returns.
The Stock Advisor’s average return stands at 982%, far surpassing the S&P 500’s 171% during the same timeframe. Consider joining the service to access the current top picks.
John Mackey, former CEO of Whole Foods Market, is a board member of The Motley Fool. Jennifer Saibil holds positions in MercadoLibre and SoFi Technologies. The Motley Fool recommends Amazon, MercadoLibre, and Shopify.
The views herein reflect those of the author and not necessarily Nasdaq, Inc.
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