When considering long-term investments, delving into the top stocks for sustained growth requires a firm grasp of core business principles. Investors should seek out companies exhibiting robust revenue expansion, cutting-edge technologies, and strategic market dominance to ensure enduring profits. Presently, businesses excelling in high-performance computing and cloud services sectors emerge as prudent choices for investors looking to solidify their portfolios for years to come.
Strong Foundations and Growth Trajectories
Typically, entities operating in these domains boast sturdy foundations and promising growth trajectories, presenting ample opportunities for lasting returns. Their stellar performance in high-demand computing solutions underscores their commanding market positions and potential for value appreciation.
Moreover, their proficiency in artificial intelligence (AI) technology equips them to excel in cloud services and AI infrastructure. Key advancements such as the rollout of next-generation AI accelerators and the expansion of data centers position them as frontrunners in meeting consumer needs.
These trailblazers in AI and cloud computing have strategically invested in infrastructure, leading to a substantial surge in cloud revenue. Ongoing capital expenditures underscore a commitment to nurturing and safeguarding competitive advantages, highlighting a dedication to long-term success.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ: AMD) specializes in building data centers and producing high-performance computing products. In Q2 2024, AMD reported revenues of $5.8 billion, reflecting a 9% year-over-year (YOY) growth. This increase was primarily steered by a robust performance in the data center and client segments, with the data center division witnessing a remarkable 115% YOY growth, amounting to $2.8 billion, nearly half of AMD’s total revenue.
The upsurge in data center revenue stemmed from Instinct MI300 GPU shipments and EPYC CPU sales, showcasing the soaring demand for AMD’s high-performance computing solutions. Furthermore, double-digit upticks in EPYC CPU sales contributed to bolstering data center revenue.
EPYC processors serve as the linchpin of AMD’s data center strategy, offering unparalleled performance and efficiency. Consequently, the data center revenue soared by 21%, underscoring stable growth even amid subdued gaming and embedded product sales.
The client segment also witnessed a 49% YOY revenue increase to $1.5 billion, buoyed by AMD Ryzen processors and early shipments of the next-gen Zen 5 processors. The robust revenue growth across all segments cements AMD’s position among the elite stocks suited for long-term investment.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ: GOOG, NASDAQ: GOOGL) predominantly focuses on AI infrastructure and cloud services. In Q2, Alphabet’s Cloud division raked in over $10 billion in quarterly revenues, with operating profits surpassing $1 billion, illuminating Alphabet’s robust presence in the cloud services sector.
The success of Alphabet hinges on its AI infrastructure and generative AI solutions, which have generated substantial revenues year-to-date (YTD), underscoring significant market traction. Alphabet’s imprint in the AI domain is underscored by recent data center expansions in Malaysia and the U.S.
The introduction of Trillium, a sixth-generation AI accelerator, marks a significant leap in the company’s computing prowess, delivering nearly five times better computer performance per chip. This innovation also slashes energy consumption by 67% compared to TPU v5e, thereby enhancing large-scale AI applications and fortifying Alphabet’s competitive edge.
Furthermore, Alphabet’s Gemini AI models exhibit versatility and efficiency, making them ideal for a wide array of AI applications. Integration of these models into prominent Alphabet products like Search, Workspace, and Google Messages augments user experience and showcases Alphabet’s AI expertise.
Overall, Alphabet stands tall among the top stocks poised for sustained growth, backed by stellar revenue achievements, expanding AI capabilities, and substantial investments in new data centers.
Microsoft (MSFT)
Microsoft (NASDAQ: MSFT) commands renown for its cloud computing services and AI technologies. The company witnessed robust revenue growth in 2023, securing annual revenues exceeding $245 billion, marking a 15% uptick from the preceding year. In Q4 fiscal 2024, Microsoft’s revenue surged by 15% YOY.
These impressive figures underscore Microsoft’s robust growth trajectory across its business segments, with cloud revenue breaching $135 billion, reflecting a substantial 23% YOY increase. The upswing in cloud revenue is attributed to Azure’s expansion, seamless AI service integration, and successful migrations.
In addition, Microsoft invested a hefty $19 billion in capital expenditures, primarily channeled into cloud and AI infrastructure. Substantial investments in data centers, CPUs, and GPUs are geared at meeting the burgeoning AI market demand and bolstering the company’s overall expansion. The global expansion of its data center network across four continents underpins scalability and international support, essential components for preserving Microsoft’s competitive edge in cloud services.
As of this writing, Yiannis Zourmpanos held long positions in AMD and GOOG. The views expressed herein solely belong to the author and adhere to InvestorPlace.com’s Publishing Guidelines.
The responsible editor, at the time of publication, did not carry any positions, directly or indirectly, in the securities referenced in this article.
Yiannis Zourmpanos is the brains behind Yiazou Capital Research, a stock-market research platform aimed at enhancing the due diligence process through in-depth business analysis.
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