There are at least two ways to make a million dollars in investing. One is to spot a future blockbuster idea long before it catches on, and the other is to invest steadily in stocks or exchange-traded funds (ETFs) with decades of wealth-building power.
The first millionaire-making method requires more luck than planning. Investment authority Benjamin Graham would call this approach “gambling,” not “investing.”
The second approach is much more reliable. Build a diversified portfolio full of solid businesses with long-term business plans and watch your net worth grow for decades. If you really want to make a million on Wall Street, this is a sensible plan. Invest $5,000 a year and accept an average annual return of 8%, and you’ll have a million-dollar portfolio after 36 years.
So I’m not here to show you the hottest growth stocks of the next decade. Instead, I’m going to introduce you to two tech stocks that look poised to deliver solid gains over the next few years. And I wouldn’t be surprised if they beat the market along the way, speeding up your journey to the $1,000,000 mark, but I’m doubling down on my unbreakable stamina in this quick review.
Amazon
What started as an online bookstore has grown into a global giant in e-commerce and cloud computing. Amazon.nl (NASDAQ: AMZN) is building a business empire for eternity, piece by piece.
It started with founder Jeff Bezos’ insight that an online marketplace without physical stores could save tons of operating costs compared to traditional bookstores. Passing those savings on to customers in the form of low book prices led to explosive growth, eventually expanding into all sorts of online retail categories.
E-commerce is still the backbone of Amazon’s business. In its recently reported second quarter of 2024, the company generated 82% of its revenue from online retail sales.
At the same time, Amazon Web Services (AWS) cloud computing platform accounted for 64% of Amazon’s operating profit. AWS started as an experimental way to monetize Amazon’s vast network of computing assets, which sometimes sat unused in its data centers. Now it’s an incredibly lucrative service, and Amazon’s gateway to the artificial intelligence (AI) boom.
The company is also building an unparalleled shipping network, developing a satellite-based broadband service to bring internet access to emerging countries, and winning Emmys and Oscars for original content on its Prime Video platform. I’m only scratching the surface of Amazon’s corporate expansion efforts here, and that’s before I mention the opportunity for international growth in its e-commerce division.
A few decades ago I might have said, “This little internet retailer is going somewhere.” Now it’s one of the largest companies in the world with a market cap of $1.8 trillion and trailing-12-month revenue of $604 billion. And Amazon is still to go somewhere.
This booming e-commerce and tech giant has no shortage of growth ideas. This is the stuff long-term returns are made of.
IBM
It’s not the same anymore International business machines (NYSE: IBM) that your parents and great-grandparents knew, building data centers in the 1990s and electronic multipliers in the 1940s. And Big Blue’s stock has underperformed the market over the past decade because of a long and painful change of strategy.
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But that business plan revision was exactly the right idea, as it positioned IBM for decades of growth and leadership in AI expertise and consulting services. The company is now beginning to prove the financial value of its new plan, and I can’t wait to see how its AI-based revenues and profits grow in the years to come.
And then I’ll be happy to see the company take another sharp turn on whatever long-term idea comes along. Maybe IBM will focus on the quantum computing domain, where it’s already setting standards without writing too many headlines. Or maybe I haven’t even heard of what next-generation business driver this innovator is working on behind closed doors.
And that doesn’t really matter. What’s important is IBM’s openness to market change. You can’t stop it — you can only hope to control it. That’s why it began focusing on Watson-branded AI systems many years before OpenAI opened the AI ​​floodgates with its ChatGPT release. IBM is built to roll with the punches and thrive in the long run. Its company has more than a century of operational history, and I expect it to be a relevant tech giant in the 22nd century.
Amazon and IBM can’t compete with the instant diversification you get from an index fund, but they might be the next best thing. With these tech giants in your pocket, you’ll be ready to weather any market shifts and economic trends that may come over the next few decades. Their staying power will help you build a million-dollar portfolio over the long term.
Should You Invest $1,000 in Amazon Now?
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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. Anders Bylund has positions in Amazon and International Business Machines. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends International Business Machines. The Motley Fool has a disclosure policy.
2 Top Tech Stocks That Can Make You a Millionaire was originally published by The Motley Fool
