Long-Term Growth Stocks: Smart Choices for Patient Investors

Long-Term Investing: A Rewarding Partnership

One of the most rewarding aspects of being a long-term investor -- someone who buys a stock with the intent to hold it for years -- is that it makes you almost like a business partner with that company. There are few things as rewarding for an investor as benefiting from the value a business creates.

Growth Stocks: A Rewarding but Discriminating Strategy

Owning growth stocks can be a remarkably rewarding investment strategy, but picking the right stocks is crucial. While the past few years in the market have proven to be great for many growth stocks, investors should know that this elevated rate of return isn't the norm over the long term. Investors should focus on stocks that are poised to do well over the long haul.

Five Brilliant Choices for Long-Term Investment

Here are five brilliant choices to consider. You can buy and hold them now, and if adversity hits the market (it will again at some point), you can confidently add more shares of these stocks. Consider this list a starting point for your own research and due diligence.

1. Broadcom

It's no secret that artificial intelligence (AI) is poised to be a significant economic force for years to come. Broadcom (AVGO -0.94%) has become a key player in the industry, thanks to its networking chips that enable the efficient communication and collaboration of vast AI chip clusters within data centers. The company has begun to win business from these AI hyperscalers with its custom accelerator chips. The demand for AI infrastructure is booming, creating a lucrative market for companies like Broadcom. As AI models become more complex, the need for powerful and efficient chips will only increase. There is a good chance that Broadcom remains an AI winner for the foreseeable future, with data center spending estimated to amount to trillions of dollars over the next five years alone. The company seems likely to capture a chunk of that opportunity. As a result, analysts expect Broadcom to grow its earnings by an average of 33% annually over the next three to five years. It's an exciting growth runway that should reward patient shareholders over the coming years. Consider examining Broadcom's debt levels and competitive landscape before investing.

2. CrowdStrike Holdings

Cybersecurity is as crucial as ever in today's digital economy. CrowdStrike Holdings (CRWD -0.69%) provides cutting-edge AI-powered security through its cloud-based Falcon platform. The company has managed to steadily expand its products, which it sells as modules, creating lasting growth as customers use more modules over time. While there is an argument that CrowdStrike may struggle to justify its current valuation, long-term investors can afford to nibble and add opportunistically if the stock offers better valuations in the future. Analysts anticipate the company will grow its earnings by nearly 20% annually. That seems plausible if CrowdStrike can remain at the front of an innovation-intensive cybersecurity market that should continue to grow. Pay attention to CrowdStrike's competition and ability to maintain its technological edge.

3. Nvidia

It's hard to discuss the AI market without mentioning Nvidia (NVDA 0.35%). The company has become the gold standard for AI infrastructure due to its high-quality accelerator chips and CUDA programming. Some industry experts have estimated its AI market share to be as high as 92%! Nvidia's ability to establish such a dominant footing in AI so early on bodes well for future opportunities as it eventually moves beyond data centers to applications like robotics and self-driving vehicles. Its stock price has multiplied since early 2023, but so have its top and bottom lines. The stock could continue to reward investors if Nvidia can meet the nearly 33% annualized earnings growth that Wall Street expects. Diversification is key: don't put all your eggs in one AI basket.

4. Alphabet

Google parent Alphabet (GOOGL -0.56%) (GOOG -0.53%) isn't some fresh stock idea, but sometimes the classics are still the best choice. Alphabet's established business, combined with its investments in future technologies, makes it a compelling long-term holding. The stock faced concerns over the company losing antitrust litigation related to its search engine business. However, the remedies for that litigation loss were not as extreme as some fears, and Alphabet isn't in danger of having to break up its Google ecosystem. Now, Wall Street is praising Alphabet for its recent AI momentum. The company's Gemini AI app is doing well, though it still lags behind ChatGPT in popularity, and its Google Cloud business is surging with profitable growth. Over the long term, upcoming opportunities in self-driving vehicles and quantum computing could begin to enter the picture as needle movers over the next five to 10 years. Wall Street analysts see Alphabet growing its earnings by about 15% annually over the long term, and it's hard not to like the company's odds of delivering. Consider the impact of potential future regulations on Alphabet's business models.

5. Meta Platforms

Social media continues to be a very lucrative business for Meta Platforms (META -1.46%), which generates billions of dollars in profits each year from the ads it shows to the approximately 3.48 billion people who use Facebook, Messenger, Instagram, and WhatsApp each day. CEO Mark Zuckerberg is still relatively young, solidifying the company's leadership for the foreseeable future. He is pushing Meta Platforms to compete for the future of personal devices. The company recently unveiled AI-powered glasses that have displays built into the lens and use a neural wristband for commands. It's still early, but Meta's push for innovation could pay off extremely handsomely if wearable AI devices become the next big thing. It's hard to imagine right now, but smartphones may not always be the primary way people connect to the digital world. Such high upside makes it a no-brainer to buy and hold, especially with analysts expecting 17% annualized earnings growth over the coming years. Consider the ethical implications of Meta's technologies and their impact on society.