4 Stocks to Buy and Hold for the Long Term!

Welcome back to the channel everyone. Today Neil and I are going to be talking about four stocks that we think are great buys to add to your portfolio and hold for the long term. And this is in a time where the market is more concentrated than ever before. We're seeing the stock market continuously driven by an unprecedented AI spending wave. And to put some numbers to that, the seven largest US tech companies, the magnificent 7, now make up about 34% of the entire S&P 500's market value. So even if that means that you own an index fund for the S&P 500, more than a third of your money is riding on just seven companies. That same group of stocks was only about 12% of the index in 2015. And the reason those companies have gotten so big, we're seeing annual capital spending on AI infrastructure is measured in hundreds of billions of dollars a year. And obviously there's the direct beneficiaries of this boom, but there's also a lot of companies that maybe the market is overlooking right now because they assume that their businesses are going to be cannibalized by the AI boom. I'm going to be talking about a couple of those businesses today. Uh Neil, great to see you. >> Great to see you as well. And it's it's quite interesting that whenever we say, "Oh, if you want to diversify, just buy the index." But yes, maybe it is a bit more diversified than just going for the MAX 7. But still 34% of it is the Mac 7. So how much diversity do we really get when buying the index today? >> Yeah, absolutely. Well, I think that's something we're going to dive into a bit with some of the companies uh on our list today. What do you have first, Neil? >> So first up, I mean both of my picks are in the Max 7. Sorry. But if we are going to look at some of the best companies out there to just put in the portfolio and forget that I do think that these two uh fit fit that description, the first one is Alphabet, Google. Most people know it by Google. It's one of the largest companies on the planet. Whenever we think about technology or the internet, you probably think about about Google. Now the interesting thing about Google is a year ago, year and a half ago, people thought this company was was done for. Chad GPT came out a couple of years ago and then oh search their their cash cow is going to go away, right? We don't see a world where people are going to use Google search in order for look for things. Well, funny enough, that did not happen. But people are still using Google search. Not only that, we've seen search revenue actually accelerate over the past couple of quarters. Last quarter, it's actually increased by 16.7% year over year. Now, the whole thing about Google is you can look at it as a sort of a Bergkshire when you look at tech or or things that can be built thanks to the internet. It's very interesting to know that Berkshire Hatway actually invested tens of billions of dollars in Google more recently, which is also something that most would not have expected because usually they don't really go for those hardcore tech companies. But going back to why I'm putting Google Alphabet there purely because if you're uncertain about what type of technology might win or not, I don't think that Google has their hands in many many jars and if you don't want to make a bet on what could work in the future, going with a company like Google where I believe we always be at the forefront of innovation could be the right the the right strategy. Then going back to why the market was mispricing this company, they completely forgot about Google Cloud. 2025, Google Cloud was growing growing quite quickly. Of course, small dollar base compared to the other big players in the cloud space. But for some reason, that didn't matter. It didn't matter that this could become a multiundred billion dollar company on its own. But right now, what we've seen is growth is accelerating there. I think it grew close to 82% year-over-year. Margins are expanding as well, 35 36% or so. And yeah, a year later, company doubled. It's worth around $4 trillion today. You have YouTube. It's also a prime asset that they own. Got subscription services. You've got ite option on autonomous vehicles with Whimo. It's truly, in my opinion, one of the best tech companies out there. If you're looking for something that's, let's say, safe without having to maybe risk too much, Google sits in a in a very, very good position. And look, in this AI world, having a very profitable core business is a huge advantage. Yeah, as a longtime uh shareholder of Alphabet, I I've definitely heard the bare case about this business a lot in the last few years, and I think you make some really important points. I mean, going back to the Google Cloud business, their contracted future revenue, their their backlog reached $514 billion in the recent quarter. So, we're seeing strong growth there. A lot of that driven by AI. AI is also of course powering the core search business as you noted which I think you know many feared uh would sort of be defunct with the rise of these new foundational uh models. Then you the Gemini app has has reached a billion monthly active users. Gemini enterprise which is their AI product for businesses. It's now used by nearly 90% of the Fortune 100. And there was a quote that really stuck out to me from the Q2 earnings call. Alphabet CEO Sundar Pachai said, you know, essentially why Google Cloud can't grow even faster despite massive demand. He said, "We continue to be supply constrained." And what does this mean? You know, they're they're not struggling to find customers for their AI solutions. They're struggling to build the data centers and buy the chips fast enough to keep up with the demand that already exists. You know, we're seeing search revenues growing double digits. Again, that incredible cloud backlog. I think that we're continuing to see a business that has been really built to innovate for uh you know each generation that it's optimized for and continues to grow in and it's one of those companies that I have held in my portfolio for many years tends to trade at a more favorable valuation compared to a lot of the mag 7 um and separating some of the stocks recent performance from the actual business. I think this is one of those key players in the AI race that is in a much better financial position than what we're seeing from a lot of the other big tech companies right now. >> Yeah. And one last thing before I let you talk about your pick, what's interesting here, especially when you go back to the bare case, is that search as a percent of the overall revenue this business generates is coming down. So, it's now at 52.8%. 2 years or so ago, that was closer to 57%. While the rest of the business as a percent of overall revenue keeps going up is now at close to 47%. I do think that it's just a matter of when, not if, we're going to see a 50/50 split. And then yes, the concentration risk where search makes up the majority of the revenue is going to go away slowly but surely. >> Yeah, I I think that's right. And that's an important piece to watch, I think, if you own this business. But I I do remain incredibly positive about the its long-term growth prospects. uh hitting a completely different uh side of the universe. I think one of the figs that we have seen is the AI boom has essentially sucked all the oxygen out of the room and the market has been not really paying much attention to some of these other businesses that might be doing really well financially but aren't quite as exciting uh as the latest and greatest AI stocks. One of those is Shopify. This is another long-term position in my portfolio. I want to give a few numbers to the market that Shopify operates in. You know, global e-commerce sales are on track to hit about $7 trillion in 2026. They're still growing faster than physical retail. And we're also seeing a lot of uh research come out now about the market for agentic commerce, which is AI agents doing some or even all of shopping on a person's behalf. You know, Morgan Stanley's estimate for just the US market by the year 2030 is anywhere from 190 to $385 billion in agentic spending and AI referred shopping traffic to US retail sites grew almost 400% year-over-year in the first quarter of this year. Now, there's a lot of beneficiaries of that. Shopify is one I go back to. This is, of course, one of the core infrastructure plays on the long-term e-commerce growth story. This is essentially the operating system for independent commerce. Everyone from mom and pop shops to huge international brands around the world. You know, it's it's software payment and logistics stack powers over a million merchants storefronts and a lot of its revenue comes from subscriptions. But the bigger and fastest growing piece is its merchant solutions product. So Shopify payments, shop pay, shipping. Basically, Shopify takes a cut of all the transactions flowing through its platform. You look at some of its uh results for the recent quarter, Q2 revenue of about $3.6 billion, that was up 34% year-over-year. GMV came in at $116 billion. That was up 32% year-over-year. Free cash flow, $654 million. That was an 18% free cash flow margin. And going back to the AI angle for the business, um, this is a company that has been continuing to optimize its platform by incorporating new AI products to help its merchants sell better, to optimize merchant engagement with customers, to optimize shipping as well to optimize uh, product listings on merchants website. A lot of the practical back-end solutions to help merchants sell more, which of course trickles down to Shopify's business are being driven by AI. Uh Shopify actually co-developed what's known as the universal commerce protocol with Google. This is an open standard so AI agents can discover, negotiate, and actually transact with merchants uh without each brand building uh custom integrations. Uh Shopify merchants were actually among the first sellers chat GBT could recommend and check check out from when OpenAI launched their agentic commerce integration. Um OpenAI's instant checkout native and chat purchase feature was also a partnership with Shopify that that underwhelmed but that was more on OpenAI side uh than Shopify. But you know going back to the merchant facing side, Shopify has its AI co-worker called Sidekick. It essentially automates a lot of workflows for merchants. Um something that we saw from uh the president of Shopify, Harley Finkelstein, in the second quarter earnings call. Essentially, he was saying AI is going to accelerate entrepreneurship than any other job. Essentially, Shopify management believes that brands are increasingly choosing the platform because it removes the burden of figuring out an AI strategy for their business on their own. Shopify handles the AI integration for them right off the bat. Merchants had nearly 34 million conversations with Shopify's AI assistant, Sidekick, in the recent quarter and used it to build more than 36,000 custom apps. So, we're seeing the clear utility of AI for a legacy e-commerce business and I think we can expect that to continue to grow. Couple other things I'll note. You know, this is also a business that is capitalizing on offline growth. I mean, they're expanding internationally. There are a lot of brickandmortar merchants uh that use Shopify solutions. Of course, a lot of online brands, but there are many brick-and-mortar stores that are benefiting uh from the tools that Shopify provides. And 68% of GMV on Shopify now flows through their proprietary Shopify payments tool. So, quality business, really profitable, and actually using AI to help the business grow, help their merchants grow, and that of course flows down to Shopify. >> Yeah. Yeah, what I really like about Shopify is one, in a world where AI changes many, many businesses and many industries, it's extremely important to have worldclass management and Shopify has that exact management team. World class. They're always on the forefront. So, every time there's something new, like you said, they were one of the first ones out there to adopt these AI solutions. They're they're making some of their own AI solutions as well. Why is it important? Because yes, in a world where not everyone has the time or patience to follow all of the new uh tools that that come out, well, Shopify just does most of it, if not all of it for you. That's why we've seen I mean, Sidekick is picking up quite a lot with they've seen an 8% increase in new merchants reaching their first five orders directly. That accelerates GMV growth. We need to see people start their business or improve their shops way faster, more efficiently. But of course, if Shopify, the business itself, has already adopted all of the newest tools out there. Me as a Shopify user, I don't have to do that much, right? You just update a couple of things here and there. You ask their own AI chatbot to improve your own stores and that's it. Of course, me as a store owner, that's great cuz my results are going to look much much better. Shopify is going to see better results for them as well, right? Gym V growth across the board. For someone that's, let's say, using a Chad GPT or an AI agent, well, he's going to get better results as well because that Shopify store is optimized for AI search results. So, in a world where not many companies or when you look at, let me reframe that. If you're looking at Shopify as just a website builder or an online shop builder, yes, if they were only that, they would be in serious trouble. But they're just doing way more than it. They're going down to the infrastructure layer, making sure that their customers are winning. If their customers are winning, then Shopify is going to win as well. >> Well, speaking of key players in e-commerce, uh your next pick, Neil, is the leader in this space. Yeah, my next speak is a small company called Amazon. It's a >> just a small family shop. >> Yeah, mom and pop business from from the 90s. Um, no. So, I went with Google as my first pick. Like I said, the second pick is also in the same category of giants out there, and that's that's Amazon. Now, I said Google, Alphabet is one of the best internet or tech businesses out there. I think Amazon as a whole is one of the best companies, well-run companies on the planet. Amazon is a company where throughout the years their total addressable market just keeps getting bigger and bigger and bigger, which is probably why they are the first company that's going to generate a trillion dollars in revenue. I think that's projected to happen in fiscal 2028. So, not that long from uh today. Now, Amazon, what's driving the business today is of course AWS. Amazon Web Services that grew 36.7% year-over-year. The backlog is getting bigger and bigger here as well. Margins are expanding. There was a period where AWS was slowing down and that's why Amazon stock was punished and people were say, "Oh, they're not moving fast enough, etc., etc." But we we've seen the business accelerate and becoming well more profitable. But that's not all. We've got the advertising business which could be considered as one of the biggest advertising businesses out there. We've got a subscription business that's also growing quite rapidly and all of those things are just subsegments of their business. Yes, it's true that the online store still a huge huge chunk of revenue, but like I said, their total addressable market is growing. Every couple of years, they're adding more and more, right? AWS didn't exist at the start of the century. When that started, people were looking at why are you even building this type of business? Well, I don't think they're asking that question. uh today we've seen them offer something called uh a logistics as a service uh business think of it as the AWS but for supply chain services and so they are making sure that whatever they've been investing for the past two decades or so just like with AWS it's the same plan it's we invest for our own business cuz we need it and then when we reach scale like okay it works for us so it's definitely going to work for a ton of other companies out there now. They've been growing in the medical space. They're investing in in satellite connectivity with project coppers. They are doing so many things right now. Yes, they're investing, I think, $200 billion in capex for this year. The majority of it is going to AI investment, but also logistics. It's probably going to be a bigger number next year. But the core Amazon business is very profitable. It's already generating tens of billions of dollars for them. We've seen this happen time and time again. Investment cycle, free cash flow goes down, goes negative. We're seeing this with many big tech companies out there. But after a while, they'll say, you know what, we are investing quite a lot. We're still going to invest a lot, but the pace of growth of those investments is going to come down. And because it's making the business more efficient, it's accelerating some business segments as we've seen, we are going to see the company's free cash flow profile go back up in my opinion very very quickly, much faster than what the market or maybe investors u might think. So Amazon to me is is again one of those companies. Yes, it might not be the next 5x or 10x from here, but if you're looking for a company that again is going to make sure that its existing business is getting better and better, their total addressable market gets bigger and bigger, it's one of those companies where I I don't think should be left out of anyone's portfolio. >> Yeah, Amazon's another long-term holding of mine. And you know I think it's important to point out as we talk about the AI infrastructure buildout. I think there are many of many companies that are not built to withstand this era. I think Amazon is an example of a business that yes they are spending billions and billions of dollars to meet demand and the demand is real but they are also actively optimizing the core businesses that have driven Amazon's profitability through the years. I mean, you look at the AWS business that you were talking about, Neil, revenue growth of about 37% in the recent quarter. That was its fastest growth rate in over four years. You're looking at a around $170 billion annualized revenue run rate for that business. Now, Andy Jasse noted that if AWS were a standalone company, that revenue alone would rank at 24th on the Fortune 500. So this is an example of a company and you know this is why we talk about the mag seven so much when we talk about investing investable AI at this point because these are the businesses like Amazon that are already showing the profits that are already showing the growth from their investments in AI. You know they have their dedicated AI uh custom chip businesses. you know, the Graviton and Tranium chips, those are now exceeding a $25 billion annual revenue run rate. Their Bedrock platform, which lets businesses build uh third party AI models, now offers both OpenAI and Anthropics models, and customers reportedly spent more on bedrock in the second quarter uh of this year alone than in all prior quarters combined since their launch. So there I think a lot of ways in which AI is a compelling story for this business, but ultimately you're looking at legacy Amazon optimizing its business for a new era. And that's something that I continue to find compelling as a long-term shareholder. >> Yeah. And before I let you go and talk about the last pick, like you said, the custom uh silicon business that they have, Trinium and Graviton, $25 billion run rate for each chip, which means if you combine that, it is one of the biggest chip businesses in the world. But this is just a sub business for a company like Amazon. Again, this is this is the beauty of of that business because I I do feel that investors still believe that selling subscriptions to an AI chatbot is a viable business model, but it's not. It It's not. >> I would agree. [laughter] >> Yeah. So, having a company like Amazon that is going to win no matter which chatbot is going to win because the core business here is just extremely good. I think it makes me sleep much better at night. Now lastly, let's uh let's switch from the big tech company and let's travel into something else. >> Well, I thought because you were covering a couple of the mag seven stocks that I should talk about some companies that haven't been as well-loved by investors, particularly as the market has really pivoted to focus on AI. Talked about Shopify. I wanted to also talk about Airbnb. This is a business that obviously generated a lot of excitement uh several years ago. And you know, we're in a time where global travel spending has fully recovered from the pandemic doldrums and continued to climb. And we're really seeing all the major travel platforms racing to add AI powered trip planning, natural language search, a customer service, again optimize a lot of the back-end solutions that customers rely on to plan their trips. You know, Airbnb is the largest alternative accommodation marketplace in the world. They have over 5 million hosts, over 8 million active listings. uh billions of accumulative guest arrivals since the platform was first launched almost two decades ago and increasingly you know this is a platform that is going beyond home rentals you know they've been layering in various services and experiences they have a small but fast growing hotels vertical again the market has not really loved the stock for a few years now and that has continued to be the case as you know a lot of the investment focus has turned to AI but just to put a few numbers to their growth story. Revenue in the second quarter of 2026 was $3.6 billion. That beat guidance. It was up 17% year-over-year. Gross booking value of $27 billion, up 16% year-over-year. They uh brought in over a billion dollars of free cash flow in the quarter, just shy of a billion dollars in net income. And you know, the CEO, Brian Chesky, he's been very clear that Airbnb is trying to become the everything app for travel and lifestyle. And what's interesting is he was famously quite cautious on AI trip planning as recently as early 2025. You know, he said it was really still too early, but then they started incorporating AIdriven customer service solutions. They've now moved into using AI to optimize their search discovery and personalization of the Airbnb platform. Airbnb has committed uh I think around $250 million to really relaunch the app and expand into lifestyle services. And you know, AI is letting Airbnb increase its features, cut product launch times by up to 60%. They're now resolving about 45% of assistant initiated customer issues without a human agent. So, they're seeing real measurable returns to the platform and to the business by using these AI solutions. And Airbnb, you know, at its core is a tech platform and management essentially spent a few years being one of the most uh, you know, kind of skeptical on the AI hype. So, it's interesting because now Chesky is saying he said in the the second quarter, right after the second quarter earnings call in an interview on CNBC, he said, "I I think it's now safe to say that AI is the best thing to have happened to Airbnb." So, that is a big pivot from a few years ago. And he said they're going to continue to spend a lot on AI computing costs, more than originally uh budgeted. Did not give an exact dollar figure, but you know, this is an interesting growth story. You know, they're diversifying the business. They're growing in kind of newer markets. Obviously, North America is very saturated for them. They're focusing on underpenetrated markets like Brazil, Japan, India. Those are growing at roughly two times its core markets. Um, this is also a company that regularly engages in, you know, share repurchases over a billion just in the recent quarter. So, really interesting company. Obviously, if you look at the stock, has not performed on par with the broader market, but the court business uh is still holding up really well. So, one to consider at least if you're looking for a bit of a contrarian play. >> Yeah, I would this this is one where I I do have an issue with uh with the company because it is so profitable, right? I think it generated $4.8 billion in free cash flow. They keep saying they're a tech company, but a tech company cannot be so far behind. Like the the this we can be the everything app. There are so many things that they should have been doing a year or so ago. And I think that would have accelerated growth faster. There's no there's no incentive for a user right now to come back to the app every single time. For example, if we go to a competitor like booking, you have that so-called rewards program, the genius program. Why doesn't Airbnb have something similar like get me to come back to the app to spend more with the platform? Cuz yes, everything else there is very seamless. It's great. The fact that they realize that yes, maybe hotels is a category that we should be growing into finally is also happening because that is that is growing at a super rapid pace. But there are things that I feel they could have done much much better. I talked about this I think two two years or so ago. Finally, they they're moving in the right direction. Like being the app where you can just open up the Airbnb app, have a chat with their chatbot, an AI travel concierge should have been something that they've they've worked on quite uh quite a while ago. I I do still think it's a business where think partnerships with outside companies is going to be the ideal way forward for them. >> Yeah. Well, and one other interesting thing as well, I mean, this was a platform that was sort of for a long time kind of known as the alternative to a lot of traditional hotel stays. And so, I think that's part of why they kept their platform segmented in that way. But we have seen that these business models coexist, right? Legacy hotels aren't going anywhere. And as well, people also like the flexibility to book stays and experiences in, you know, homes and and other locations around the world. And so, I think the growth story is there. So, I, you know, I'm not saying to go all out and buy a huge position of Airbnb, but I do think it's still a quality business that's trading at a discount, and I still think there's an intriguing growth story there. All right. Well, that brings us to the end of today's video. Neil and I talked about four very different uh businesses today. On the one hand, we had a couple key members of the [music] Mag 7, Alphabet and Amazon, two longtime favorites for my portfolio. And I talked about Shopify and Airbnb. Two really interesting [music] businesses that are also continuing to grow in the age of AI, but getting a lot less attention from investors. [music] So, we want to hear from you guys. What stocks are on your watch list? What do you think of the stocks we talked about today? What stocks would you like us to talk about in future videos? Leave us a comment, [music] subscribe, and hit the like button. And we'll see you in the next video.