Inflation-Proof Growth Stocks That Could Outperform the Market

Growth stocks with strong fundamentals and the ability to maintain or increase pricing power even during inflationary periods are attractive to investors seeking to outperform the market over the long run. However, it bears mentioning that investing in growth stocks, particularly during periods of uncertainty, requires a long-term investment horizon, as well as patience because market fluctuations are both normal and inevitable.

With that in mind, here are two growth stocks to buy and hold for the long run that could prove to be particularly resilient and deliver market-beating returns in the years ahead even if inflationary headwinds heighten.

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1. Microsoft

Microsoft (NASDAQ: MSFT) has been a consistent market beater through the years, more than tripling the S&P 500's performance over the last decade. And it's proven that its highly diversified revenue streams, powerful ecosystem effects, strong financial position, and proven ability to shift to meet changing markets have made it a highly adaptable, profitable business. Microsoft's largest revenue driver is its Intelligent Cloud business, which generated nearly 40% of its total revenue in the company's fiscal 2025. The highly profitable Azure cloud computing platform is a key part of this segment and continues to show strong growth driven by artificial intelligence (AI) workloads. Bear in mind, corporate cloud spending tends to be stable even during economic downturns.

Microsoft's Productivity and Business Processes segment is its second-largest driver of revenue, which includes the subscription-based Microsoft 365 suite and LinkedIn, and accounts for more than 20% of its top line. Products like Windows, Microsoft 365, and Azure are deeply integrated into the core operations of Microsoft's clients, which makes it difficult for customers to switch to a competitor's product due to the high cost and disruption of doing so.

Microsoft has demonstrated a remarkable ability to pivot its business model to remain relevant in a shifting technological landscape. Previously, the company successfully shifted from a licensing model based on desktop software to a cloud-centric business under CEO Satya Nadella. This was a critical and strategic move that set the company up for long-term growth and resilience. Most recently, Microsoft has made major investments in AI, which have already started generating tangible revenue and are a key part of the company's long-term strategy.

Microsoft's financial health allows it to make large, strategic bets and makes it well positioned to weather economic uncertainty. Microsoft had a very strong fiscal year 2025, with revenue increasing 15% to $281.7 billion, net income up 16% to $101.8 billion, and operating income rising 17% to $128.5 billion. This performance was driven primarily by the Intelligent Cloud segment, led by Azure, and significant contributions from AI services, which fueled a 34% year-over-year growth for Azure.

While Microsoft pays a dividend that yields less than 1%, it has an impressive history of raising its dividend, with 23 consecutive years of increases and counting. Its strong balance sheet generates substantial free cash flow, which supports its dividend payments even while heavily investing in growth areas like AI and cloud infrastructure.

The dividend represents only a small fraction of the company's earnings too, so there is plenty of room for future dividend growth. Microsoft enacted about $18.4 billion of share repurchases in fiscal 2025 alone. Microsoft continues to look like a smart stock to buy and hold for the long run for market-beating returns.

2. Mastercard

Mastercard (NYSE: MA) has consistently beaten the market over the long term thanks to the generous performance of its core business model. If you look over the trailing-10-year period alone, Mastercard has generated a total return of more than 500% compared to the S&P 500's return of about 290%. And there are several reasons Mastercard can keep doing so, rewarding long-term, buy-and-hold investors in the process.

Mastercard earns fees as a percentage of the total dollar volume of transactions processed on its network. As the prices of goods and services rise due to inflation, the dollar volume of transactions also increases. Mastercard's revenue therefore grows without needing to raise its own rates. As a digital network, Mastercard has a capital-light business model with very few incremental costs for each additional transaction. This high operating leverage means that as revenues rise, a larger percentage flows directly to the bottom line and expands its profit margins.

Unlike banks that issue credit cards, Mastercard does not lend money to consumers. This shields the company from the credit risk associated with inflation and potential loan defaults, a risk that grows when consumers' purchasing power is squeezed. Along with Visa, Mastercard operates in a global duopoly that is extremely difficult for competitors to penetrate. The more merchants that accept Mastercard and the more banks that issue its cards, the more valuable the network becomes to all participants. This powerful network effect acts as a massive competitive advantage.

Mastercard is strategically moving beyond its core card network to become a data-driven technology company, with significant investments in cybersecurity, fraud detection, and data analytics to benefit the financial institutions and merchants it services. Value-added services revenue consistently grows faster than the core payments business.

The company had a strong second quarter in 2025, beating analyst expectations with net revenues of $8.1 billion (up 17%) and adjusted earnings per share (EPS) of $4.15 (up 16% year over year). Gross dollar volume increased by 9%, and cross-border volume grew 15% on a local currency basis. Meanwhile, net revenue from value-added services and solutions increased by 22% year over year. Mastercard has also consistently paid a dividend for nearly two decades, so growth-oriented investors can also enjoy some consistent income on top of share-price appreciation with this stock.

Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard, Microsoft, and Visa. 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.