2 Stocks to Buy Now and Hold Forever

Key Points

• Amazon's cloud computing platform and advertising are delivering phenomenal earnings growth.

• Taiwan Semiconductor's leadership position will be nearly impossible to replace.

• 10 stocks we like better than Amazon ›

Few stocks ever land in the "buy now and hold forever" category for me. I can come up with a bear case for nearly every investment I have. However, there are a few companies that have such a rock-solid investment thesis that I doubt the worst-case scenario would ever materialize. These stocks end up in my "buy now and hold forever" pile, and I've got two that I think fit in this category.

Amazon (NASDAQ: AMZN) and Taiwan Semiconductor Manufacturing (NYSE: TSM) are two companies in this rarified section of my portfolio, as the long-term trends they are exposed to are powerful.

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1. Amazon

When you hear the name Amazon, the first thing you probably think about is the e-commerce store. While I also fall into that trap, the reality is Amazon has become so much more. While the commerce platform gives Amazon ultimate staying power and steady high-single-digit revenue growth, it's the other businesses that get me excited.

The first is Amazon Web Services (AWS). AWS is Amazon's cloud computing wing, and provides the majority of Amazon's profits. In the first quarter, 63% of Amazon's operating profits came from AWS, despite AWS accounting for only 19% of sales. This isn't an anomaly; it's a long-term trend that demonstrates the immense power of the cloud computing space. Furthermore, it's rapidly expanding as both artificial intelligence (AI) workloads and general business processes are being moved to the cloud.

As AWS goes, so will Amazon's stock. With the future looking bright and sustainable for AWS, I think it's an excellent reason to own the stock.

Another emerging segment for Amazon is its ad business. As the world's largest e-commerce platform, Amazon has access to the best data available for its clients, indicating what consumers are actively searching for.

Advertising has emerged as one of Amazon's fastest-growing segments, experiencing significant growth over the past few years. While Amazon doesn't break out the profit margins of this division, the performance of other advertising-focused businesses suggest that it's likely quite high.

With an unrelated cloud computing business alongside a commerce business that's continuously expanding its margins, Amazon is a nearly irreplaceable company that should deliver year after year of strong earnings growth. As a result, it's a company I'm comfortable buying and holding practically forever.

2. Taiwan Semiconductor

Taiwan Semiconductor may seem like a head-scratcher for this list. Most people could easily come up with a worst-case scenario for TSMC: Mainland China attempts to take over and integrate Taiwan. This could lead to war and crash Taiwan Semi's stock. However, Taiwan Semiconductor is practically the sole supplier of cutting-edge chips used by clients including Apple and Nvidia, not to mention numerous other important use cases for national defense.

As a result, if there were a war in Taiwan, the broader stock market would crash, dragging nearly every stock down with it. There will be no safe havens (besides defense stocks and consumer staples) if that occurs, so I discount that possibility.

If you can look beyond that threat, then TMSC becomes a buy-and-hold-forever stock.

With the rise of AI and other high technologies, demand for Taiwan Semiconductor's chips has never been higher. Additionally, it has proven that it can continuously innovate, as it already produces leading 3 nanometer chips, and plans to launch 2nm and 1.6nm chip architectures later this year and in 2026.

It has also consistently demonstrated the ability to deliver better chip yields than its competitors, resulting in lower prices for its clients. TSMC has built up a significant lead over chip foundry competitors, and it would take a huge misstep to lose that lead. I believe Taiwan Semiconductor is an excellent stock to buy now and hold for the long term, given the expected continued increase in demand for chips.

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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. Keithen Drury has positions in Amazon, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Amazon, Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.