It's been tricky to be a stock investor in recent years. The COVID-19 pandemic sent shares in many companies soaring as consumers increased spending on tech and online shopping. Then, an economic downturn in 2022 stole much of the growth these companies had gained the year before, with inflation hikes triggering a sell-off.
This year has seen another shift in the market. Companies have gradually recovered, as eases in the cost of living and advances in tech, such as artificial intelligence (AI), have made Wall Street bullish again. However, market volatility over the last few years has highlighted the importance of dedicating a large portion of your portfolio to promising growth stocks. Doing so can safeguard your investments from temporary headwinds and offer consistent gains over the long term.
So, here are two growth stocks I'm buying until I'm blue in the face.
1. Amazon
Recent fluctuations in the stock market are no more apparent than through Amazon (AMZN 1.17%). The company's shares hit record heights in 2021 as millions of homebound consumers turned to the retail giant for essentials. Then, its stock plunged 50% throughout last year, with macroeconomic headwinds leading to significant profit declines in its e-commerce business.
However, the company has proven its resilience with a solid recovery this year. In the first quarter of 2023, Amazon's North America segment returned to profitability. Then in Q2 2023, the segment hit over $3 billion in operating income, a significant rise from the $627 million in losses it reported in the year-ago period.
The improvements are the product of rises in consumer sales and several restructuring moves. Last year, Amazon reacted quickly to poor economic conditions by closing or canceling construction on dozens of warehouses, sunsetting unprofitable platforms like Amazon Care, and laying off thousands of workers. Meanwhile, it has heavily invested in AI, adding several new AI tools to its cloud platform, Amazon Web Services, this year.
Amazon's total operating income climbed 132% year over year in its recent quarter. The spike illustrates that Amazon has the resources and leadership to recover if external issues arise, making it a reliable investment option. Its stock is still down 24% from its high in July 2021, with massive growth potential over the next year. It's absolutely a growth stock worth buying right now.
2. Microsoft
Microsoft (MSFT 0.11%) has become a favorite among investors this year. Its shares are up 40% since Jan. 1. However, the company has promising growth prospects thanks to potent brands such as Windows, Office, Xbox, and Azure.
Millions of businesses and consumers worldwide have come to rely on Microsoft for their productivity and entertainment needs. Based on the success of its brands, the company's annual revenue has risen 68% over the last five years, with operating income up 106%. Meanwhile, its stock has jumped 200% in that time.
Moreover, Microsoft's long-term future is bright as it continues to invest in AI. The company was an early investor in the market, sinking $1 billion into ChatGPT developer OpenAI back in 2019. The partnership has given Microsoft exclusive access to much of the start-up's technology, which it has used to bring AI upgrades across its product lineup. Many consumer and business-centered Office programs now offer AI features, with Microsoft 365 expected to release a range of AI tools soon.
Microsoft's productivity and business processes segment earns its second-largest portion of revenue, reporting 9% year-over-year growth in fiscal 2023. The segment includes earnings from Office Commercial products, an increasingly lucrative area for the company.
Operating income rose 15% during the fiscal year for the productivity segment, hitting $4.5 billion. Meanwhile, the introduction of AI services in Office programs allows Microsoft to combine powerful brands such as Word, Excel, and PowerPoint with OpenAI's technology, which could attract millions of new users.
Microsoft has a long history of consistent growth and is home to some of the most recognizable software brands. Alongside a push into AI, it's a growth stock I feel confident buying until I'm blue in the face.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com and Microsoft. The Motley Fool has a disclosure policy.
