2 Soaring Growth Stocks to Buy and Hold Forever

Motley Fool
07-08
  • With more than 3.4 billion people using its services every day, Meta Platforms has the resources to be a leader in AI.
  • Netflix is a dominant entertainment brand with multiple ways to drive growth for shareholders.

There is a great advantage in parking your money in a stock and holding it for decades. Uninterrupted compounding interest has a big payoff because you're not selling shares and paying taxes on capital gains. If you identify competitively positioned businesses that can sustain growth over multiple decades, you're on a path to building wealth.

To help you in your search, here are two top tech stocks that might qualify as "forever" investments.

Image source: Getty Images.

1. Meta Platforms (Facebook)

Meta Platforms (META -0.13%) has more than 3.4 billion people using its apps every day. It's got stellar financials, and management is investing billions in technology and artificial intelligence (AI) to position Meta AI as the most used personal assistant.

Meta is growing revenue and earnings at strong rates as the digital advertising market continues to expand. Social media makes up a large chunk of the $700 billion digital ad market. In the first quarter, Meta's revenue and earnings grew 16% and 37%, respectively.

AI enhancements are lifting engagement across its social media platforms. Meta AI has nearly 1 billion monthly users, up from 700 million at the end of 2024. A stand-alone app for Meta AI was released in April, which is powered by the Llama 4 large language model.

But CEO Mark Zuckerberg is not satisfied. While the company plans to spend between $64 billion to $72 billion on infrastructure to support its growth, Zuckerberg is making a big push to hire top talent. According to a report from the Wall Street Journal, Meta recently hired away three researchers from ChatGPT maker OpenAI.

This illustrates an advantage Meta has in the AI race with its resources, where it generates $66 billion in trailing-12-month net income. Meta reportedly offered $100 million in signing bonuses to lure away OpenAI's talent. The stakes are that big.

Meta Platforms can leverage its significant user base and AI investments to grow its ad revenue. The company can innovate with new AI-powered services that could drive significant growth for investors, and that's clearly what Zuckerberg is aiming for.

The stock is reasonably priced, trading at 28 times this year's consensus earnings estimate. Investors can sleep well at night knowing it has a CEO that understands what's at stake and is investing to maintain the company's competitive edge.

2. Netflix

Netflix (NFLX -0.64%) stock has given investors an incredible run the past few years. The company's more affordable ad-supported plans and paid sharing initiative, forcing all viewers to have a paid membership, have accelerated revenue growth, lifting the stock to new all-time highs.

Many investors may look at the high share price and think it's too late, but it is never too late to invest in a great business. Netflix is the dominant streaming service with more than 300 million paid households, but there are multiple ways for the company to keep growing.

Netflix reported a 12.5% year-over-year increase in revenue in Q1, and management sees top-line growth improving to 15.4% in Q2. The bump in revenue growth reflects Netflix's recent price increases. Netflix has regularly raised its subscription prices for years, which is a sign of tremendous brand strength.

It also continues to expand its operating profit margin that can support a growing content budget to win over more of the 1.5 billion-plus broadband users worldwide. Analysts expect earnings to grow 22% on an annualized basis in the coming years, reflecting further margin expansion opportunities.

One of those opportunities is advertising. Netflix is tapping into a monster opportunity with its ad-supported plans. Management is guiding for its advertising revenue to double in 2025.

Netflix's total viewership is estimated at more than 700 million, and it's still growing as it signs up more subscribers. As the company continues to expand into live broadcasts, such as sports, it has a lot of upside with advertising, which can boost margins.

The stock trades at a high multiple or earnings, but it's also growing earnings at robust rates from improving margins. Netflix also has relatively low business risk due to millions of people paying monthly subscription fees, which along with improving profitability, makes the stock worth a premium valuation. Netflix is a quality growth stock that can grow your savings for years to come.

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