There are at least two ways to make a million dollars in investing. One method is to stumble on a future blockbuster idea long before it catches on, and the other is to make steady investments in stocks or exchange-traded funds (ETFs) with decades of wealth-building staying power.
The first millionaire-maker method involves more luck than planning. Investing authority Benjamin Graham would call this approach “gambling,” not “investing.”
The second approach is much more reliable. Build a diversified portfolio full of robust companies 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, settling for 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 stock of the next decade. Instead, I’ll suggest two tech stocks that look ready to deliver solid gains for many years to come. And I wouldn’t be surprised to see them beat the market along the way, accelerating your journey to the $1,000,000 mark, but I’m doubling down on unbreakable staying power in this quick review.
What started as an online bookstore has grown into a global behemoth of e-commerce and cloud computing. Amazon.com (NASDAQ: AMZN) is building a business empire for the ages, bit by surprising bit.
It started with founder Jeff Bezos’ insight that an online marketplace without physical stores can save tons of operating costs compared to traditional book stores. Passing on those savings to customers in the form of low book prices led to explosive growth, eventually expanding into all sorts of online shopping categories.
E-commerce is still the backbone of Amazon’s operations today. In the recently reported second quarter of 2024, the company collected 82% of its revenues from online retail sales.
At the same time, the Amazon Web Services (AWS) cloud-computing platform accounted for 64% of Amazon’s operating profit. AWS started life as an experimental way to make some money from Amazon’s massive network of computing assets, which sometimes sat unused in their data centers. Now, it’s an incredibly lucrative service and also Amazon’s gateway into the artificial intelligence (AI) boom.
The company is also building an unmatched shipping network, developing a satellite-based broadband service to provide internet access for emerging countries, while winning Emmies and Oscars for the Prime Video platform’s original content. I’m just scratching the surface of Amazon’s business expansion efforts here, and that’s before even mentioning the opportunity for international growth in the e-commerce division.
A couple of decades ago, I might have said that “this little Internet retailer is going places.” Now, it’s one of the largest companies in the world with an $1.8 trillion market cap and $604 billion in trailing twelve-month sales — and Amazon is still going places.
This flourishing e-commerce and technology titan is not running short on growth ideas. This is the stuff that long-term returns are made of.
It’s not the same old International Business Machines (NYSE: IBM) that your parents and great-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 last decade due to a long and painful strategy shift.
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But that business plan revamp was exactly the right idea, as it positioned IBM for decades of growth and leadership in AI expertise and consulting services. The company is starting to prove the financial worth of its new plan right about now, and I can’t wait to see how its AI-based revenues and profits will rise in the next few years.
And then I’ll be thrilled to see the company take another sharp turn into whatever long-term idea comes next. Maybe IBM will lean into the quantum computing realm, where it is already setting the standards without writing too many headlines. Or perhaps I haven’t even heard of whatever next-generation business driver this innovator is working on behind closed doors.
And it doesn’t really matter. The important part is IBM’s open attitude to market change. You can’t stop it — you can only hope to control it. That’s why it started focusing on the Watson-branded AI systems many years before OpenAI opened the AI floodgates with its ChatGPT release. IBM was built to roll with the punches and thrive in the long haul. Its business already has more than a century of operating history, and I full expect it to be a relevant tech titan in the 22nd century, too.
Amazon and IBM can’t compete with the instant diversification you get from an index fund, but they may be the next best thing. With these tech giants in your pocket, you’ll be ready to ride out whatever market shifts and economic trends might emerge over the next few decades. Their staying power will help you build that a million-dollar portfolio in the long run.
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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 Could Make You a Millionaire was originally published by The Motley Fool
