With the market no longer being whipsawed around from tariff news, now can be a good time to add some attractive long-term growth stocks. Let's look at five of my favorites.
An e-commerce and cloud computing leader, Amazon (NASDAQ: AMZN) has been incorporating artificial intelligence (AI) across its businesses to drive efficiency, expand margins, and fuel growth.
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Its cloud computing unit, Amazon Web Services (AWS), is both its largest business by profitability and its fastest-growing segment. The growth is being powered by customers using its solutions, like Bedrock and SageMaker, to create their own AI models and apps and then running them on its data center infrastructure.
Meanwhile, its proprietary AI chips (Trainium and Inferentia) give it a cost and performance advantage. The company is investing heavily in new AI infrastructure to meet surging demand, and history shows that Amazon tends to spend big to win big.
On the e-commerce side, Amazon is using AI a variety of ways to improve the efficiency of its warehouse and logistics operations and reduce costs. This includes such things as using AI to create better routes and maps, to developing AI-powered robots that can lift heavy objects and identify damaged items to reduce costly returns.
It's also using AI in its sponsored ad business to better target potential buyers. Combined, these efforts have already been leading to strong operating leverage, but more gains should be in store.
Despite the stock's rebound from its lows, Amazon still trades at a historically attractive valuation. While the company is not immune to consumer spending risks, given the strong AI tailwinds it is seeing, the stock looks like a buy at current levels.
Like Amazon, Meta Platforms (NASDAQ: META) is also leveraging AI to help drive growth. By incorporating AI recommendations into Facebook and Instagram, Meta is increasing user engagement on its social media platforms. The increased amount of time users are spending on its platforms, meanwhile, is leading to more ad impressions.
In addition, the company is using AI on the back-end to help advertisers create more attractive campaigns and better target potential customers. This is leading to better ad performance, which is helping drive up ad prices. These dynamics could be seen in Meta's Q1 results, with revenue jumping 16% year over year, driven by a 5% increase in ad impressions and a 10% rise in ad pricing.
In addition to AI, Meta also has a big opportunity with its newest social platform: Threads. Meta has a strong history of building social media audiences and then later successfully monetizing them. Threads already has more than 350 million monthly active users and growing, and the company will begin to gradually look to serve ads on the platform in the coming years.
While Meta is also exposed to economic and ad spending risks, the stock looks well-positioned to continue to be a long-term AI winner.
Image source: Getty Images.
Pinterest (NYSE: PINS) has undergone a real transformation under CEO Bill Ready. The online vision board company has leaned heavily into AI to make the platform more engaging and more shoppable -- and it's working. Monthly active users hit 570 million last quarter, up 10%, with international growth leading the way.
More importantly, Pinterest is finally starting to better monetize these users, especially in the "rest of world" segment, where revenue jumped 49%, and average revenue per user (ARPU) surged 29%.
This momentum is being driven by Pinterest's technology upgrades. The company has developed a multi-modal AI model trained on both images and text to better interpret user intent. This is driving more personalized recommendations, while its visual search feature lets users quickly find and shop for products they see in pinned content.
On the back-end, its Performance+ platform uses AI and automation to simplify campaign setups, optimize bidding, and improve user targeting. It is still early in its rollout, but it should be a long-term growth driver.
Like Amazon and Meta, Pinterest also is exposed to any ad market weakness. However, with a large, undermonetized use base, Pinterest has some strong upside potential from here.
Turning to the beauty sector, e.l.f. Beauty (NYSE: ELF) built one of the fastest-growing cosmetics brands in the U.S. by disrupting the mass-market space with on-trend, affordable products and a savvy influencer-driven marketing strategy. While recent growth has moderated, the acquisition of Hailey Bieber's Rhode brand is a potential game changer that could reaccelerate momentum in a big way.
Rhode is already a hit with younger consumers, generating $212 million in sales with just 10 products and minimal paid advertising. With e.l.f.'s deep retail relationships, like Target and Ulta Beauty, and Rhode also set to expand into Sephora later this year, e.l.f. has a huge opportunity to grow Rhode's distribution in the years ahead. Rhode also brings in a more affluent customer base and strengthens e.l.f.'s growing skincare presence, complementing last year's Naturium acquisition.
While tariff risks remain, this is a company with a huge growth opportunity in front of it.
Dutch Bros (NYSE: BROS) is one of the most compelling growth stories in the restaurant space. With just over 1,000 locations in 18 states, Dutch Bros has a long expansion runway ahead of it. It is targeting 2,029 stores by 2029, and believes it has a total market opportunity of 7,000 locations in the U.S.
However, the Dutch Bros' story is about more than just unit growth. It's been posting strong same-store sales growth, including 4.7% last quarter. Even better, comparable-store sales at company-owned shops rose 6.9%. That's impressive execution in what was a tough consumer environment.
Importantly, Dutch Bros has additional levers to improve its same-store sales with mobile ordering and food. Mobile ordering accounted for 11% of transactions last quarter. Meanwhile, food is less than 2% of sales today, versus 19% at Starbucks. The company has been testing more food items at a few locations with early success.
While not immune from any economic weakness, the combination of store expansion, food, and mobile ordering makes the stock an attractive long-term buy.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Geoffrey Seiler has positions in Pinterest and e.l.f. Beauty. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Pinterest, Starbucks, Target, Ulta Beauty, and e.l.f. Beauty. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.