2 Brilliant Stocks to Buy and Hold for 10 Years
Key Points
Investing in reliable companies over the long run is a better way to make money than speculative trades.
Alphabet's high-margin ads and cloud computing make it easier to tap into other opportunities.
Amazon's fundamental growth rates are on the upswing, and high-margin parts of the business are dictating future gains.
- These 10 stocks could mint the next wave of millionaires ›
Time in the market beats timing the market, especially for investors who focus on growth stocks with solid fundamentals and long-term growth opportunities.
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Amazon (NASDAQ: AMZN) both fit the description nicely. These storied stocks have outperformed the S&P 500 for many years. Alphabet has still been outperforming the S&P 500 over the past year, while Amazon is due to catch up.
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Online advertising profits help Alphabet invest in many industries
Alphabet's biggest moneymaker is online advertising. When people search for content on Google and YouTube, they encounter advertisements that generate high margins for the company. Google Services revenue, which primarily consists of those two sources, reached $89.6 billion in Q1, a 16% year-over-year increase. That's also more than 80% of Alphabet's total revenue growth.
Google and YouTube were enough to push Alphabet to a $1 trillion valuation, but its other businesses make it a compelling pick. Since Alphabet's online ads are high-margin, it can endure multiple years of unprofitability from other segments and wait patiently for them to scale.
That's what happened with Google Cloud, a segment that was unprofitable for more than a decade. Google Cloud has now become the centerpiece of Alphabet's long-term growth, and it's profitable. Google Cloud revenue continues to accelerate, driven by artificial intelligence (AI), and its sales grew 63% year over year in Q1.
Alphabet can follow the same playbook with other initiatives, including AI model Gemini and self-driving vehicle provider Waymo.
Alphabet is well-positioned to capitalize on any new opportunities AI creates, and it doesn't trade at a moonshot valuation. A P/E ratio of 27 is reasonable given Alphabet's fundamental strength. That's a lower valuation than the S&P 500, even though most of the companies in that benchmark aren't delivering revenue and net income growth rates as high as Alphabet's.
Amazon has the same advantages, but it is concentrating more on high-margin opportunities
Amazon also taps into multiple industries and has a highly profitable engine that supports expansion into other ventures. Amazon first established itself as the leading online marketplace and introduced free two-day shipping for Amazon Prime members. Other retail giants followed suit with their own membership plans that came with free two-day shipping.
The online marketplace continued to grow, contributing to the company's 17% year-over-year revenue growth in Q1. However, one flaw of an e-commerce model is that it often relies on low profit margins. Walmart and Costco Wholesale both have net profit margins that hover near 3%, while Amazon has double-digit net profit margins.
Amazon's margins are increasing faster than those of other retailers and e-commerce companies because it's not just an online marketplace. Amazon Web Services, the predecessor of Google Cloud, remains a vibrant, high-margin part of the business. Sales from that segment were up 28% year over year in Q1 as AI tailwinds propel all cloud computing platforms.
Amazon's AI chip business has been surging as well and is now up to a $20 billion run rate in revenue. Nvidia's and Broadcom's successes in selling AI chips show that Amazon can command very high net profit margins. These two chipmakers have net profit margins hovering near 70% and 40%, respectively, showing what is possible for Amazon.
Amazon is also tapping into online ads across its marketplace to boost profit margins. This high-margin part of the business grew by 24% year over year, outpacing the company as a whole. If Amazon Web Services and online ads continue to propel Amazon's growth, net profit margins should continue to improve.
The tech giant even issued rosy guidance for Q2, which implied 16% to 19% year-over-year revenue growth. Amazon is expanding into key industries while leveraging AI to get more out of its existing businesses.
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*Stock Advisor returns as of July 6, 2026.
Marc Guberti has positions in Broadcom. The Motley Fool has positions in and recommends Alphabet, Amazon, Broadcom, Costco Wholesale, Nvidia, and Walmart. The Motley Fool has a disclosure policy.
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