Investing in the stock market requires a strategic approach. Especially when one is aiming for long-term financial growth and stability. This is where the concept of “Forever Stocks” comes into play. Here, the focus is on seven exemplary companies that embody these qualities.
These companies span diverse sectors. Each has demonstrated constant performance, strategic growth, and stability critical to building a resilient portfolio. A portfolio that can withstand market volatility and capitalize on demand opportunities.
The first company leads in semiconductor technology, driving growth with advanced processes. The second one dominates with AI and cloud services, showcasing robust market positioning. The third one excels with its high-performance processors and GPUs, reflecting strong demand and financial health.
The fourth company’s cloud and AI advancements underscore its market strength. The fifth one is profitable across semiconductor and software segments, highlighting its long-term potential. The sixth one has an extensive payment network and consistent growth that ensures its enduring value. Lastly, the seventh one’s strategic shift towards smoke-free products positions it for sustained market lead.
Taiwan Semiconductor (TSM)
Taiwan Semiconductor (NYSE:TSM) manufactures advanced semiconductors. Its Q2 2024 revenue increased by 13.6% sequentially in NT dollars and by 10.3% in U.S. dollars. Within that, 3-nanometer process technology contributed 15% of wafer revenue. Meanwhile, 5-nanometer and 7-nanometer tech accounted for 35% and 17%. Further, advanced technologies (7-nanometer and below) comprised 67% of wafer revenue. High-performance computing (HPC) was also boosted by 28% quarter-over-quarter, contributing 52% of total revenue. Whereas, IoT and automotive segments grew by 6% and 5% annually.
Indeed, the considerable increase in topline reflects the strong demand for advanced technologies (3-nanometer and 5-nanometer processes). The diverse contribution across various technologies and platforms points to TSMC’s fundamental ability to edge on multiple high-growth segments. This diversification spreads risk and positions TSMC to capitalize on growth in multiple tech sectors. Overall, TSMC’s lead in diversified high-growth segments makes it a solid pick among top forever stocks.
Alphabet (GOOG,GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) excels in AI and cloud services. The cloud services attained considerable milestones in Q2 2024. The cloud segment crossed the $10 billion mark in quarterly revenue for the first time and had over $1 billion in quarterly operating profit. This high growth signifies Alphabet’s cloud services’ increasing demand and robust performance. The milestone of surpassing $10 billion in revenue and achieving $1 billion in operating profit reflects a strong market position and sharp cost management.
Further, Alphabet’s AI infrastructure and generative AI solutions have generated billions in revenue and are used by over 2 million developers. This broad adoption underscores the company’s competitive edge in AI technology. Alphabet’s leadership in research and infrastructure allows it to pursue an in-house strategy that boosts agility and advancement. Moreover, Alphabet’s sixth-generation AI accelerator, Trillium, attains a near 5x increase in peak compute performance per chip and a 67% improvement in energy edge against the previous generation. In short, Alphabet’s competitive edge in AI technology and considerable growth in cloud services cement its position among forever stocks.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) leads in high-performance processors and GPUs. The company’s operating income for Q1 2024 was $1.1 billion, a 21% operating margin. This represents a considerable improvement over the $36 million operating income reported in Q4 2023. The high increase in operating income comes from the data center and client segments. The operating income margin of 21% further illustrates AMD’s robust financial health and ability to convert revenue into profit effectively.
Additionally, the Data Center segment’s revenue growth is noteworthy, reaching a record $2.3 billion in Q1 2024. This segment’s revenue increased 80% year-over-year (YoY) and 2% sequentially. It points to the strong demand for AMD’s data center solutions. These include the AMD Instinct MI300X GPUs and fourth-gen EPYC processors. The considerable YoY growth was driven by the robust ramp-up of AMD Instinct GPU shipments and a vital increase in server CPU sales. With strong growth in the data center segment and solid performance, AMD stands out as a top choice on the forever stocks list.
Microsoft (MSFT)
Microsoft’s (NASDAQ:MSFT) dominance in cloud computing, particularly with Azure. The company’s cloud business represents a fundamental strength that underpins its rapid growth potential. In the third quarter, Microsoft Cloud attained record revenues of $35 billion, a 23% increase from the previous year. The continued expansion of Azure primarily drove this growth. Azure’s success is attributed to its diverse AI accelerators, including NVIDIA (NASDAQ:NVDA), AMD, and Microsoft’s own silicon. The cloud platform’s capability to support and integrate with various AI models, such as the recently introduced Phi-3, reflects its advanced infrastructure. Notably, over 65% of the Fortune 500 companies are now utilizing Azure OpenAI Service, reflecting its growing dominance in the market.
Further, Azure’s revenue growth is supported by considerable increases in large deals. The number of Azure deals worth $100 million or more grew by over 80% YoY, while deals exceeding $10 million more than doubled. This acceleration in large deals, coupled with increased average spending, highlights Microsoft’s expanding footprint in the cloud sector. Overall, the company’s ability to secure large cloud deals and integrate advanced AI models solidifies its lead on the forever stocks.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) offers communication semiconductors and infrastructure software. The company attained a consolidated gross margin of 76.2% in Q2 2024, demonstrating strong profitability. The gross margin for the semiconductor solutions segment was 67%, and for infrastructure software, it was 88%. The margin disparity highlights the software segment’s high profitability against semiconductors. Broadcom’s operating income for Q2 2024 was $7.1 billion, with an operating margin of 57% of revenue. Excluding transition costs, the operating margin improved to 59%. These high operating margins reflect effective cost management and efficient operations.
Moreover, the semiconductor segment reported an operating margin of 55%. Although this was slightly lower than in previous periods due to the increased mix of custom AI accelerators, it still represents a solid margin in a competitive sector. This segment had an operating margin of 60%, which improved to 64% when excluding transition costs. The high margins in this segment are attributed to the high profitability of VMware’s software solutions. In short, Broadcom’s lead in AI accelerators and considerable operating margins underline its place on the forever stocks list.
Visa (V)
Visa’s (NYSE:V) holds an extensive payment network. The company’s overall payments volume grew by 7% YoY in constant dollars (Q3 fiscal 2024), indicating a steady increase in transaction activity across its network. The U.S. payments volume grew by 5%. Meanwhile, international payments volume increased by 10%. This highlights more robust growth outside the domestic market. The company experienced a 14% YoY increase in cross-border volume, excluding intra-Europe transactions. This considerable growth reflects Visa’s ability to facilitate international transactions, which typically carry higher fees.
Additionally, processed transactions grew by 10% YoY, emphasizing the scalability and edge of Visa’s transaction processing infrastructure. Visa attained a Global Net Promoter Score (NPS) of 76, up three points from the previous year. The increase in NPS across all client types (merchants, issuers, fintechs, and processors) and regions, with a vital 6-point improvement in North America, underscores the company’s strong client relationships and satisfaction levels. To sum up, with increasing cross-border transaction volumes and high client satisfaction, Visa is a solid pick on the forever stocks list.
Philip Morris (PM)
The tobacco giant Philip Morris (NYSE:PM) leads in smoke-free products and holds a multicategory portfolio. Philip Morris’s IQOS and ZYN products have a solid performance. The underlying momentum of IQOS continued in Q2 2024, with shipment and adjusted IMS volume growth exceeding expectations. Notably, Q2 HTU shipments reached 35.5 billion units, reflecting strong demand in Japan and Europe despite regulatory challenges. Despite supply tensions and price increases, ZYN’s U.S. volumes surged by over 50% in Q2 2024. This growth indicates the product’s strong market acceptance and PMI’s ability to navigate supply chain challenges effectively.
Indeed, Philip Morris’s strategy of building a multicategory portfolio is paying off. VEEV has become the closed pod leader in five European markets, and international nicotine pouch volumes grew by over 60% in H1 2024. Philip Morris’s smoke-free product consumer base grew to approximately 36.5 million adult users by June 30, 2024, reflecting an additional 3.2 million users during H1. This growth underscores the increasing acceptance and adoption of Philip Morris’s smoke-free alternatives. Hence, this transition positions Philip Morris for sustained market lead, making it one of the top forever stocks.
As of this writing, Yiannis Zourmpanos held long positions in TSM, GOOG, AMD and PM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.