The S&P 500 confirmed a bull market earlier this year and registered double-digit gains in the first half as investors piled into growth stocks. Those in the technology industry, especially companies focused on artificial intelligence (AI), scored the biggest wins. But if you didn't benefit, don't worry. You still can find plenty of solid investment opportunities in the space -- ones that could boost your portfolio in the near term and over time as this exciting field develops.
In fact, right now, two players make excellent buys. They are involved in AI, but they aren't entirely dependent upon it. They're leaders in their areas, have solid moats, and have proven their strengths over time. I consider them no-brainer stocks to buy without hesitation right now because you can comfortably hold on to these market giants for years -- and, with them, you're likely to score a victory in the years to come.
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1. Amazon
Amazon (NASDAQ: AMZN) is a giant in two high-growth markets: e-commerce and cloud computing. The company's extensive infrastructure and fulfillment network as well as its Prime membership program offer it a significant moat , or competitive advantage, in the e-commerce world. Members turn to Amazon for just about everything -- from groceries to entertainment -- and Amazon continues to use its efficiency efforts to drive down prices and speed up delivery times. All of this keeps customers coming back.
But the company's biggest profit driver is Amazon Web Services (AWS), its cloud computing business. AWS is the world's No. 1 cloud services provider, and recently reached a $100 billion annual revenue run rate -- thanks to its investments in AI. AWS offers customers a full portfolio of AI products and services including the basics like chips as well as a fully managed service to customize large language models according to their needs.
Amazon's e-commerce and cloud businesses have helped the company generate earnings increases, into the billions of dollars, over the years. And one recent tough time -- during rising inflation in 2022 -- prompted Amazon to revamp its cost structure, a move that helped it soar back to growth last year. And this stronger cost structure should help the company excel in the years to come.
Today, Amazon stock is trading for 40x forward earnings estimates . It's not the cheapest tech stock around, but Amazon's leadership, strong moat, and future prospects make it worth the price -- and an excellent stock to get in on now, to benefit as its next chapters of growth unfold.
2. Apple
When people think of the word "apple," they may think of the company Apple (NASDAQ: AAPL) before the piece of fruit. That's how strong this brand is -- thanks to a portfolio of market leading products, from the iPhone to the Mac. This brand strength offers Apple a moat that's proven itself over time. For example, Apple fans will wait for the next version of the iPhone and won't switch to another brand even if it's less expensive.
All of this has helped Apple reach an installed base of active devices of more than 2.2 billion. This is positive because the sales of devices results in revenue growth, but it also leads to something much more for Apple. I'm talking about services revenue. The company offers a variety of services -- from cloud storage to digital content -- to users, and this means those 2.2 billion devices could generate recurrent revenue for the company. Services revenue has been showing its strength, reaching record highs quarter after quarter in recent times.
And another positive point about services revenue is its higher margin than hardware sales -- so the company can generate significant profit from these sales.
Finally, Apple recently announced the upcoming release of a suite of AI features, putting the company on the map when it comes to AI -- and offering a potential new growth driver.
Right now, Apple shares trade for 33x forward earnings estimates, a very reasonable price to pay for this market leader that should continue to deliver revenue gains over time. And that's why it's a no-brainer addition to any portfolio right now.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool has a disclosure policy .
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