When investing for the long term, identifying the top stocks to buy and hold requires a good comprehension of overall business fundamentals. Investors should focus on companies with solid revenue growth, advanced technologies and strategic market leads for steady long-term gains. Right now, companies that are excelling in the high-performance computing and cloud services sectors are smart choices for stocks to buy and hold for several reasons.
Typically, companies in these spaces have strong foundations and growth trajectories, and offer solid opportunities for long-term gain. Their robust performance in high-demand computing solutions highlights their sharp market lead and value growth potential.
Similarly, their expertise in artificial intelligence (AI) technology enables them to succeed in cloud services and AI infrastructure. Important developments, such as the launch of next-generation AI accelerators and the growth of data centers, provide them with a competitive edge to meet consumer demand.
Lastly, these innovators in AI and cloud computing have made significant strategic investments in infrastructure. As a result, cloud revenue has significantly increased, and continuing capital expenditures highlight a focus on fostering and preserving competitive advantage.
The three stocks on this list represent companies who are thriving in the aforementioned industries and, therefore, offer great potential for investors looking for stocks to buy and hold.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) builds data centers and manufactures high-performance computing products. AMD’s revenue in Q2 2024 was $5.8 billion, a 9% year-over-year (YOY) increase. This increase was derived from a strong performance in the data center and client segments. The data center segment grew 115% YOY, reaching $2.8 billion, representing nearly 50% of AMD’s top line.
The surge in data center revenue emerged from Instinct MI300 GPU shipments and EPYC CPU sales. The ramp-up in Instinct MI300 GPU shipments significantly boosted data center revenue, reflecting the high demand for AMD’s high-performance computing solutions. Further, double-digit increases in EPYC CPU sales further enhanced data center revenue.
EPYC processors are core to AMD’s data center strategy, offering high performance and efficiency. Subsequently, the data center top line rose 21%, indicating stable growth. This was achieved despite the softness of gaming and embedded products.
The client segment also grew, with revenue up 49% YOY to $1.5 billion. This increase was driven by AMD Ryzen processors and early shipments of the next-generation Zen 5 processors.
Its strong revenue growth across all segments puts AMD among the top stocks to buy and hold.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) primarily focuses on AI infrastructure and cloud services. Alphabet’s Cloud division had over $10 billion in quarterly revenues in Q2. As a result, operating profits exceeded $1 billion. This highlights Alphabet’s stronghold in the cloud services sector.
Its AI infrastructure and generative AI solutions are driving this success. These solutions have generated billions in revenues year-to-date (YTD), emphasizing high market demand. Alphabet’s mark on AI demand is evident through new data centers in Malaysia and the U.S.
The launch of Trillium, which is a sixth-generation AI accelerator, also marks solid advancements in the company’s computing performance. Trillium achieves nearly five times better computer performance per chip. It also improves energy efficiency by 67% compared to TPU v5e. These advancements support large-scale AI applications and will help Alphabet maintain its competitive edge.
Additionally, Alphabet’s Gemini AI models are versatile and efficient, making them great for various AI use cases. The different models are integrated into major Alphabet products like Search, Workspace and Google Messages which enhances user experience and demonstrates Alphabet’s AI strength.
Overall, Alphabet ranks among the top stocks to buy and hold thanks to its revenue milestones, expanding AI capabilities and increased investment in new data centers.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is renowned for its cloud computing services and AI technologies. The company attained solid top line growth in 2023. Annual revenue surpassed $245 billion, a 15% increase from the previous year. In Q4 fiscal 2024, Microsoft’s revenue rose 15% YOY.
These impressive numbers highlight Microsoft’s strong growth trajectory across its business segments. Cloud revenue alone exceeded $135 billion, marking a 23% YOY increase. The rise in cloud revenue is attributed to Azure expansion, AI service integration and successful migrations.
Additionally, Microsoft invested $19 billion in capital expenditures, primarily for cloud and AI infrastructure. Heavy investments in data centers, CPUs and GPUs will help Microsoft meet AI market demand and support the company’s overall growth. Expanding its data center footprint across four continents ensures scalability and global support. These assets are vital for maintaining Microsoft’s competitive edge in cloud services.
As of this writing, Yiannis Zourmpanos held long positions in AMD and GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
