Investors looking for both strong business growth and massive addressable markets often end up at two familiar names: Amazon (AMZN 4.22%) and Alibaba (BABA -3.96%). Each has a powerful commerce engine, a fast-growing cloud platform, and a significant opportunity in AI infrastructure and applications.

But when you strip away headlines and focus on the operating results and the playbook for the next few years, one option stands out as the clear winner.

Image source: Getty Images.

Amazon: broad-based, profitable growth

Amazon’s latest quarter showed healthy top-line growth and strong profit execution. Revenue rose double digits, with both its North America and international year-over-year growth rates in top-line revenue accelerating significantly, and Amazon Web Services (AWS) expanding at a rate of nearly 18% year over year. Operating income climbed sharply as the company continues to drive efficiency across fulfillment and cloud. It’s the kind of combination long-term investors want: growth with expanding earnings power.

Furthermore, AWS’s momentum and scale are extraordinary. The cloud-computing business’s annualized revenue run rate is now just over $123 billion. The business has powerful momentum in AI. For generative AI solutions, specifically, Amazon CEO Andy Jassy said in its second-quarter earnings call that it is growing sales by a triple-digit year-over-year percentage and has “more demand than we have supplied for at the moment.”

Highlighting the benefit of Amazon’s scale, the cloud computing segment’s operating margin remains robust — at 32.9% (adjusted to exclude the impact of foreign exchange headwinds) in Q2 — even as Amazon steps up investment in data centers, networking, and accelerators to meet AI demand.

Meanwhile, Amazon’s online store segment, where the company records e-commerce sales, grew by 11% year over year in Q2 — up from 5% growth in Q1. Similarly, the company’s high-margin advertising business clearly accelerated because Amazon’s other revenue segment, which primarily consists of advertising sales, grew 19% year over year in Q2 — up from a growth rate of 4% in Q1.

Alibaba: A cheaper valuation — but for a reason

Alibaba’s latest quarter gave investors a clear (and bullish) data point: accelerated cloud growth and the stock ripped higher. Revenue in its cloud intelligence segment rose 26% year over year, powered by an eighth quarter in a row of triple-digit year-over-year growth in AI-related product revenue.

The overall picture of Alibaba’s business, however, is more nuanced. Total revenue increased just 2% year over year, or 10% when excluding sales in the year-ago quarter from recently sold businesses. Further, Alibaba’s adjusted earnings before interest, taxes, and amortization (EBITDA) fell 14% year over year as the e-commerce and cloud-computing company leaned into what it calls “quick commerce,” or ultra-fast delivery, broader user experience investments, and AI. These heavy investments also meant that free cash flow went from positive in the year-ago quarter to negative.

A clear winner

Both stocks could end up being long-term winners. But Amazon ultimately offers the better risk-reward.

Alibaba is cheaper on traditional valuation multiples (but more expensive than it used to be after its recent sharp move higher) and is returning significant capital via buybacks and dividends. This lower valuation helps make up for the company’s lower growth and some of the risks associated with China’s weak macroeconomic backdrop. Indeed, given how cheap the stock’s valuations is (it currently trades at just 15 times earnings), Alibaba could end up being a bargain in hindsight. But only if China’s economy picks up speed and consumer and enterprise spending reaccelerate. If this happens, the upside in the stock price could be massive. But the company still has some things it needs to prove to investors to command a higher valuation multiple; it needs to demonstrate scalability, shown by operating margin expansion and free cash flow improvement, as Alibaba grows. We’re not there yet.

Ultimately, Amazon offers the cleaner, more reliable setup. The company has three growth vectors that reinforce one another: retail, advertising, and cloud — and each of these drivers will likely contribute substantially to Amazon’s business in the coming years. Retail keeps getting faster and more convenient, ads help further monetize the company’s e-commerce customers, and AWS offers investors a fast-growing, high-margin catalyst for the business. Together, Amazon’s broad-based catalyst of scaled and profitable business segments provides investors with more certainty when thinking about the company’s long-term potential.

If I had to pick just one of these two growth stocks today, I’d choose Amazon — despite its higher valuation of about 35 times earnings. The operating momentum is better, the AI strategy is tied to an already scaled platform, and the cash generation gives the company room to invest through cycles. Alibaba is investable and improving, but the execution bar (and ultimately the risk) is higher.

The U.S. gross domestic product grew 3.3% year over year in the second quarter. That number shows the resilience of the U.S. economy despite higher interest rates and global macroeconomic uncertainty.

In such an environment, investors can particularly benefit from putting their money into companies with scale, durable cash flows, and the ability to ride secular tailwinds.

Image source: Getty Images

Here’s why these two stocks fit the criteria, making them wise buy-and-hold choices for the long term.

1. Nvidia

Nvidia (NVDA -3.38%) has firmly established itself as the leading player in artificial intelligence (AI) infrastructure, as it accounts for nearly 92% of the data center GPU market. That dominance has been the foundation of its robust financial performances of recent years. In its fiscal 2026 second quarter (which ended July 27), Nvidia reported revenues of $46.7 billion, up 56% year over year and exceeding guidance, while its GAAP (generally accepted accounting principles) gross margin was 72.4%. Management now expects fiscal third-quarter revenue to reach $54 billion, plus or minus 2%, driven by increasing demand for its Blackwell-architecture GPUs.

Nvidia estimates that between $3 trillion and $4 trillion will be invested in AI infrastructure by the end of 2030. En route to that total, it expects hyperscalers and enterprises to invest nearly $600 billion in data center infrastructure and computational technologies in calendar 2025, nearly double the amount that was invested in 2023. Nvidia’s Blackwell-based AI systems, such as the GB200 NVL System and GB300 platform, are increasingly being used by cloud service providers and consumer internet companies to train and power large AI models.

Nvidia’s proprietary Compute Unified Device Architecture (CUDA) software stack can be used to optimize its hardware for specific AI workloads. CUDA has become the industry standard, used by over 5 million developers. Nvidia has also strengthened its position in networking solutions, where its record quarterly revenue of $7.3 billion was driven by demand for Spectrum-X Ethernet, InfiniBand, and NVLink from customers building massive AI clusters. The company also highlighted that networking is now a $10 billion-plus annualized revenue business for it, underlining its importance as data centers evolve into AI factories.

Although U.S. restrictions on exporting the highest-end GPUs to China have been a headwind for the company, Nvidia is responding by adapting versions of its Blackwell chips (B30A ) that adhere to the new regulations and seeking regulatory approvals for broader deployments. It has already done this with its previous Hopper architecture, creating the H20 for Chinese customers. The company estimates the Chinese market opportunity to be nearly $50 billion in 2025.

Nvidia has also continued to reward its investors. In its fiscal second quarter, it returned $10 billion to shareholders through buybacks and dividends, and the board authorized an additional $60 billion stock repurchase program.

Trading at about 39.5 times expected forward earnings, Nvidia’s stock is quite expensive. However, that valuation seems justified considering its robust financials and unmatched AI ecosystem.

2. Alphabet

Alphabet (GOOG 0.56%) (GOOGL 0.63%) has firmly established itself as a dominant technology powerhouse, with a leadership position in digital advertising and rapidly expanding presences in cloud computing and artificial intelligence. In the second quarter, it reported revenues of $96.4 billion, up 14% year over year, and operating income of $31.2 billion. Those results underscore the scalability and profitability of its business model. The company also had $95 billion in cash and securities on its books at the end of the quarter, giving it the flexibility to keep investing in growth while returning capital to shareholders.

Alphabet’s core advertising businesses have demonstrated remarkable resilience. Google Search continues to provide more than half of total revenues, with AI-enhanced search features such as AI Overviews, AI Mode, and Lens offering new ways for users to access information. This has helped deepen user engagement and improve monetization. YouTube generated nearly $9.8 billion in advertising revenues in the second quarter, while subscriptions added another layer of recurring revenue streams.

Google Cloud accounted for a 13% share of the global spending on cloud infrastructure services in the second quarter, up 1 percentage point year over year. Google Cloud is benefiting from a growing demand for AI infrastructure and generative AI services worldwide. Google Cloud revenues were up 32% to $13.6 billion.

Alphabet has also successfully integrated advanced AI technologies across its entire ecosystem to improve productivity and efficiency, and create better user experiences. Its Gemini models are powering Search, Gmail, Workspace, and Maps. This is helping it hold onto its user base and improve avenues for monetization. Alphabet is also investing in other opportunities such as autonomous driving through its Waymo, healthcare, and quantum computing units — giving investors exposure to next-generation technologies.

It has been returning significant capital to shareholders, including nearly $16.1 billion returned through share buybacks and dividends in the second quarter.

Despite a resilient advertising business, a fast-growing cloud division, and deep AI integration, Alphabet trades at 18.3 times forward earnings, lower than its five-year average of 23.9.

Risks such as increased regulatory scrutiny, a looming court ruling in a major anticompetition case, rising competition in digital advertising, and concerns about the long-term impact of AI on search monetization may be among the reasons why the stock trades at a discounted valuation. Yet this very discount provides investors with the opportunity to buy shares of a dominant, cash-rich business with an AI-enabled platform at a reasonable price.

Considering these factors, Alphabet stock looks like an attractive stock to buy now and hold for the foreseeable future.

The S&P 500 and Nasdaq Composite are hovering around all-time highs. A big part of the rally is investor excitement for sustained artificial intelligence (AI)-driven growth and adjustments to Federal Reserve policy that open the door to interest rate cuts.

While investor sentiment and macroeconomic factors undoubtedly influence short-term price action, the stock market’s long-term performance ultimately boils down to earnings.

Nvidia (NVDA 1.10%) will report its second-quarter fiscal 2026 earnings on Aug. 27 after market close. Here’s why expectations are high, and why the “Ten Titans” stock could single-handedly move the S&P 500.

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Nvidia’s profound impact on the S&P 500

The Ten Titans are the largest growth stocks by market cap — making up a staggering 38% of the S&P 500.

Nvidia is the largest — with a 7.5% weighting in the index.

The other Titans are Microsoft, Apple, Amazon, Alphabet, Meta Platforms, Broadcom, Tesla, Oracle, and Netflix.

Aside from its value, Nvidia is also a major contributor to S&P 500 earnings growth.

NVDA Market Cap data by YCharts

Megacap tech companies influence the value of the S&P 500 and its earnings. And since many of the top earners are growing quickly, the market arguably deserves to have a premium valuation.

Since the start of 2023, Nvidia added roughly $4 trillion in market cap to the S&P 500. But it also added over $70 billion in net income — as its trailing-12-month earnings went from just $5.96 billion at the end of 2022 to $76.8 billion today. That’s like creating the combined earnings contribution of Bank of America, Walmart, Coca-Cola, and Costco Wholesale in the span of less than three years.

Nvidia’s value creation for its shareholders, and the scale of just how big the business is from an earnings standpoint, is unlike anything the market has ever seen. But investors care more about where a company is going than where it has been.

Nvidia’s unprecedented profit growth

Expectations are high for Nvidia to continue blowing expectations out of the water. Over the last three years, Nvidia’s stock price rose after its quarterly earnings report 75% of the time. Analysts have spent the last few years flat-footed and scrambling to raise their price targets as Nvidia keeps raising the bar. It looks like they aren’t making that mistake any longer — as near-term forecasts are incredibly ambitious.

As mentioned, Nvidia’s trailing-12-month net income is $76.8 billion, which translates to $3.10 in diluted earnings per share (EPS). Consensus analyst estimates have Nvidia bringing in $1 per share in earnings for the quarter it reports on Wednesday and $4.35 for fiscal 2026. Going out further, analyst consensus estimates call for 37.8% in earnings growth in fiscal 2027, which would bring Nvidia’s diluted EPS to $6 per share.

NVDA Net Income (TTM) data by YCharts

Based on Nvidia’s current outstanding share count, that would translate to net income of $107.7 billion in fiscal 2026 and $148.5 billion in fiscal 2027. Unless other leaders like Alphabet, Microsoft, or Apple accelerate their earnings growth rates, Nvidia could become the most profitable U.S. company by the time it closes out fiscal 2027 in January of calendar year 2027. These projections strike at the core of why some investors are willing to pay so much for shares in the business today.

The key to Nvidia’s lasting success

Nvidia can single-handedly move the stock market due to its high weighting in the S&P 500. However, its influence goes beyond its own stock, as strong earnings from Nvidia could also be a boon for other semiconductor stocks, like Broadcom. But the ripple effect is even more impactful.

In Nvidia’s first quarter of fiscal 2026, four customers made up 54% of total revenue. Although not directly named by Nvidia, those four customers are almost certainly Amazon, Microsoft, Alphabet, and Meta Platforms. So strong earnings from Nvidia would basically mean that these hyperscalers continue to spend big on AI — a positive sign for the overall AI investment thesis.

However, Nvidia’s long-term growth and the stickiness of its earnings ultimately depend on its customers translating AI capital expenditures (capex) into earnings — which hasn’t really happened yet.

ORCL CAPEX To Revenue (TTM) data by YCharts

Cloud computing hyperscalers are spending a lot on capital expenditures (capex) as a percentage of revenue — showcasing accelerated investment in AI. But eventually, the ratio should decrease if investments translate to higher revenue.

Investors may want to keep an eye on the capex-to-revenue metric because it provides a reading on where we are in the AI spending cycle. Today, it’s all about expansion. But soon, the page will turn, and investors will pressure companies to prove that the outsize spending was worth it.

The right way to approach Nvidia

Almost all of Nvidia’s revenue comes from selling graphics processing units, software, and associated infrastructure to data centers. And most of that revenue comes from just a handful of customers. It doesn’t take a lot to connect the dots and figure out just how dependent Nvidia is on sustained AI investment.

If the investments pay off, the Ten Titans could continue making up a larger share of the S&P 500, both in terms of market cap and earnings. But if there’s a cooldown in spending, a downturn in the business cycle, or increased competition, Nvidia could also sell off considerably. So it’s best only to approach Nvidia with a long-term investment time horizon, so you aren’t banking on everything going right over the next year and a half.

All told, investors should be aware of potentially market-moving events but not overhaul their portfolio or make emotional decisions based on quarterly earnings.

If you’re like many investors, you either own or want to own the “Magnificent Seven” stocks, which are Apple, Amazon.com, (Google parent) Alphabet, (Facebook parent) Meta Platforms, Microsoft, Nvidia, and Tesla.

You might also want to own companies that could become Magnificent-Seven-like — in other words, terrific growth stocks. But which companies are the next great investments? It can be hard to know, which is why it’s smart to buy a bundle of promising stocks, spreading your risk and opportunity around.

Image source: Getty Images.

Consider, therefore, investing in the Vanguard Growth ETF (VUG -0.34%), which you can do with as little as $100. (To clarify, a single share recently went for $463, so if you only had $100 to invest, you’d need to buy a fraction of a share, which some good brokerages allow you to do.) An exchange-traded fund (ETF) is a fund that trades like a stock.

Meet the Vanguard Growth ETF

The Vanguard Growth ETF tracks the CRSP U.S. Large Cap Growth Index, which is focused on large-cap companies growing at a faster-than-average clip, and the ETF aims to deliver roughly the same returns, minus its low fees. Specifically, its expense ratio (annual fee) is just 0.04%, meaning that you’ll be charged a whopping $4 per year for every $10,000 you have invested in the fund.

The ETF held 165 stocks, as of June 30, per Vanguard, with 60% of assets in the technology sector, followed by 19% in the consumer discretionary sector. Here are the top 10 holdings, which together made up about 59% of total assets:

Source: Vanguard.com, as of June 30.

You can see that all the Magnificent Seven stocks are there — and among the top holdings. And given that these 10 holdings make up more than half the ETF’s value, it’s clear that the other 155 stocks will be relatively minor holdings for the ETF — and its shareholders. Still, those top 10 companies are in the top 10 because they grew to huge sizes, and it’s not crazy to let your winners run and keep winning.

This ETF and its more well-known fellow index fund, the S&P 500 index fund, are, like lots of others, market-cap-weighted, meaning that the bigger the component company, the more influence it will wield on the index. That’s why the top 10 companies above make up so much of the Vanguard Growth ETF’s value — because they have such hefty market caps.

If you’re in the market for diversification with less concentration, you might look for a good equal-weighted ETF, such as the Invesco S&P 500 Equal Weight ETF, which holds each of its 500-some components in roughly equal proportion. The Invesco equal-weight ETF’s top-10 holdings would, therefore, make up only about 2% or 3% of the overall ETF value.

How has the Vanguard Growth ETF performed?

Here’s how the Vanguard Growth ETF would have rewarded you over several recent periods. I’ll compare its numbers to those of a low-fee S&P 500 index fund, too, and you’ll see that it outperformed the S&P index fund handily:

Source: Morningstar.com, as of August 12, 2025.

There’s no guarantee that it will always outperform, though, and it’s good to remember that since growth stocks tend to fall harder in market downturns, there may be years when it really underperforms. For example, in 2022, when the S&P 500 ETF dropped by around 18%, the Vanguard Growth ETF dropped by 33%. Ouch!

Still, long-term investors have enjoyed solid overall gains, and it’s rarely good to focus on any one year. So go ahead and consider the Vanguard Growth ETF for your growth-stock needs. But perhaps complement it with some other solid index ETFs.