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Amazon and Meta are using AI to help power growth.
Broadcom looks poised to be a big winner in the continued AI infrastructure buildout.
Philip Morris and e.l.f. Beauty have two of the best growth stories in the consumer space.
There are a number of companies that are well positioned to deliver solid revenue and earnings growth over the next several years.
Here are five monster stocks to buy right now and hold for the next five years or more.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
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While Amazon (NASDAQ: AMZN) is a leader in e-commerce and cloud computing, what it is doing behind the scenes is the best reason to own the stock. At its cloud computing division, the company is helping customers customize, build, and deploy their own artificial intelligence (AI) models and tools through its Bedrock and SageMaker platforms and then run them on its infrastructure. But it goes beyond that, with Amazon having developed its own custom chips for AI training and inference, giving it a cost advantage.
Another behind-the-scenes area where Amazon is a market leader is robotics. The company is the world's largest operator of mobile robots, having just deployed its millionth robot, which is working at one of its fulfillment centers. These robots aren't just moving boxes, they are detecting damaged goods, navigating tight aisles, and even fixing themselves.
Meanwhile, the company recently introduced its DeepFleet AI model to coordinate the movement of its entire fleet of robots in order to save time and boost throughput. The company is also using AI to create better delivery routes and make it easier for drivers to find difficult drop-off locations within large apartment or office complexes.
All of this is making Amazon more efficient and should lead to strong earnings growth in the years ahead.
Broadcom (NASDAQ: AVGO) is one of the winners of the AI infrastructure buildout. Its portfolio of networking components -- which consists of Ethernet switches, digital signal processing, network interface cards, and optical receivers -- is needed for moving data across massive AI clusters. Last quarter, the company saw a 70% jump in AI networking revenue.
However, the company's bigger opportunity lies in custom AI chips. Broadcom helped Alphabet design its Tensor Processing Units (TPUs), and now it has multiple customers developing their own custom AI application-specific integrated circuits (ASICs). These chips can offer better efficiency and performance than off-the-shelf graphics processing units (GPUs), and Broadcom has become the primary partner for several top tech companies that are creating their own custom AI ASICs.
Broadcom estimates that its three customers furthest along in their development could each deploy 1 million AI chip clusters by fiscal 2027, representing a $60 billion to $90 billion total serviceable addressable market. That's a big potential growth opportunity for the company in the years ahead.
Meta Platforms (NASDAQ: META) owns one of the largest digital advertising platforms in the world, and AI is making it even more powerful. The company is using its Llama AI model to drive higher engagement across Facebook and Instagram by displaying more relevant content, increasing personalization, and adding interactive features. Meanwhile, the more time users spend on its platform, the more ad inventory it has to sell.
At the same time, Meta's new AI tools are improving both ad creativity and targeting, leading to better ad performance. Last quarter, ad impressions rose 5% while average price per ad jumped 10%, demonstrating that its platform is becoming more effective for marketers.
In addition, Meta has two new monetization opportunities emerging. The company just started serving ads on its popular messaging platform, WhatsApp, which boasts more than 3 billion users. At the same time, it's also begun to gradually serve ads to its new social media platform Threads, which had more than 350 million monthly users as of last quarter and is growing quickly.
Between the better monetization of its core platforms and new opportunities with WhatsApp and Threads, Meta has a solid growth outlook over the next several years.
Philip Morris International (NYSE: PM) has become one of the best growth stories in the consumer staples space. While most tobacco companies are facing volume declines due to their U.S. exposure, Philip Morris is thriving thanks to Zyn and Iqos. Zyn nicotine pouches are exploding in popularity in the U.S., with shipments up 53% last quarter. Philip Morris raised its full-year guidance to 800 million to 840 million cans, and that still might be conservative.
Internationally, Iqos is gaining strong traction. The company sold more than 37 billion heated tobacco units last quarter, with strong growth in Japan and Europe. Philip Morris recently regained U.S. rights to Iqos and is piloting it in Austin, Texas. Once the FDA clears its latest device, a broader U.S. rollout could begin. Best of all, this would not cannibalize existing sales, since Philip Morris doesn't sell cigarettes in the U.S.
What really sets these products apart, though, are their unit economics. Zyn is 6 times more profitable than traditional cigarettes, while Iqos is more than twice as profitable. In addition, Philip Morris tends to use local manufacturing, which shields it from any tariffs.
With global cigarette sales still holding up outside the U.S., Philip Morris is a rare growth stock in a defensive industry.
E.l.f. Beauty (NYSE: ELF) had already disrupted the mass cosmetics market before it agreed to acquire Rhode, Hailey Bieber's skincare and cosmetic brand. While some celebrity deals flop, this one could be transformational. Rhode generated $212 million in sales over the past year with barely any paid advertising and only a few products that it sold directly through its website.
Rhode was already set to expand into Sephora stores this year, and e.l.f. has strong relationships with retailers Ulta Beauty and Target. Increased distribution is one of the surest ways to increase growth, and e.l.f. will have a long runway of getting Rhode products onto retail shelfs.
The deal also diversifies e.l.f. into prestige skincare and cosmetics, complementing its mass-market cosmetics base. That should boost margins and expand its reach to a slightly more affluent demographic. While the company will face tariff headwinds, the Rhode deal should help power strong growth in the years ahead.
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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. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has positions in Philip Morris International and e.l.f. Beauty. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Target, and e.l.f. Beauty. The Motley Fool recommends Broadcom and Philip Morris International. The Motley Fool has a disclosure policy.
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