3 No-Brainer Growth Stocks to Buy Right Now

Key Points

• Microsoft, Alphabet, and Amazon all posted healthy midyear results and are investing heavily in cloud and AI to extend their leads.

• Near-term margins may reflect elevated investment, but each company's cash generation and competitive position support a long runway.

• If you want durable growth you can hold for years, these three leaders still fit the bill -- even if the stocks aren't cheap today.

• 10 stocks we like better than Amazon ›

Large-cap tech offers no shortage of options, but a few names clearly stand apart. Their businesses are durable, their cash flow is steady, and their growth prospects look especially bright over the next decade.

After fresh midyear updates, Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL), and Amazon (NASDAQ: AMZN) remain no-brainer additions for a growth-focused portfolio. Each has just posted healthy results and is spending aggressively where it matters most: cloud and artificial intelligence (AI). Best of all, all three companies benefit from diversified business models and have enduring characteristics thanks to their market-leading competitive advantages, making them great long-term investments.

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Strong quarters across the board

Microsoft's summer update was exceptionally robust. Azure's (the tech giant's cloud computing business) growth paced the quarter, and the company continued returning cash to shareholders even as it scales AI across its products. For its fourth quarter of fiscal 2025 (a period ending on June 30), Microsoft's total revenue rose 18% while Azure and other cloud services grew 39%. And highlighting its appreciation for shareholders, the company returned $9.4 billion via dividends and buybacks.

Alphabet -- the owner of Google Cloud and Google properties like Gmail, Google search, and YouTube -- similarly posted broad-based strength. Search and YouTube saw double-digit gains, and the company's cloud computing arm, Google Cloud, was the star again. In Q2, Alphabet's total revenue rose 14% to $96.4 billion, while Google Cloud revenue jumped 32% to $13.6 billion as demand for AI infrastructure and new generative tools widened the customer base. Management also highlighted a larger capital expenditure plan to meet that demand.

Meanwhile, Amazon's update echoed the same theme: Exceptional growth in cloud computing accompanied by robust growth elsewhere. The e-commerce and cloud-computing giant's second-quarter net sales increased 13% year over year to $167.7 billion, and Amazon Web Services (Amazon's cloud-computing operation) saw sales grow 17.5% to $30.9 billion. This well-rounded growth boosted operating income 31% year over year to $19.2 billion.

Catalysts and risks

For all three companies, the common thread behind some of their biggest opportunities is AI. However, this is also one of their biggest risks, as building out AI capabilities is expensive.

For Microsoft, its near-term catalysts are Copilot monetization, AI consumption on Azure, and a steady cadence of continued enterprise seat expansion. But the company is also clear about the trade-off that comes with moving fast in AI -- cloud gross margin has dipped as it builds out infrastructure, a reasonable price to pay for durable share gains. Of course, it's worth noting that Azure's gross margin is greater than the company's overall gross margin, so if there's a trade-off of improving this high-margin business in exchange for the segment's margin coming down a bit, it's still a net win for the overall company.

Alphabet's second quarter demonstrated broad momentum. The tech company's "Search and other" revenue rose 12%, and YouTube ad sales climbed 13%. But the big catalyst right now is in Google Cloud, with 32% revenue growth and a 20.7% operating margin (up from 11.3% in the year-ago quarter), showing that it's now pulling in meaningful profits. But its capital expenditures, as the company pursues AI integrations across its products, are steep. Alphabet expects to spend about $85 billion this year on capital expenditures, driven largely by its efforts to expand AI capacity. For long-term investors, that spend should extend the company's advantages in Search, YouTube, subscriptions, and cloud computing. But it also raises the bar for execution.

At Amazon, two engines matter most over the next few years. First, AWS is broadening from core compute and storage to a richer AI stack -- foundation models, managed services, and agentic tools -- which should deepen customer spend. Second, North America retail continues to optimize fulfillment and last-mile density, supporting higher operating margins even without upbeat macro assumptions. But Amazon is similarly spending a fortune on capital expenditures to support its AI ambitions, so much so that its trailing-12-month free cash flow (operating cash less capital expenditures) is $18.2 billion -- far below the $53 billion it earned in the year-ago trailing-12-month period.

These stocks aren't cheap. Microsoft, Alphabet, and Amazon's price-to-earnings ratios are about 36, 25, and 35, respectively, at the time of this writing. Adding to the risk, all three are investing heavily right now. But that's precisely the point. The spending is tied to products customers are already using more of every quarter. Therefore, for investors seeking quality assets with strong long-term growth potential, Microsoft, Alphabet, and Amazon are good choices and look poised to live up to their valuations as they invest heavily in their future growth, increasing the odds of more years of robust growth ahead.

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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.