Getting rich quick is a great daydream. A sudden windfall is rare and more the stuff of legend than reality. As the world’s best investors have proven again and again, the only reliable method of building wealth is investing in the stock market at a slow, steady pace.
The most successful investors choose companies with strong fundamentals, including a wide moat, talented management, and solid financials.
Then they buy shares at prices that are even with or below the company’s intrinsic value. They hold those shares indefinitely, riding the ups and downs of standard business cycles without selling out of panic when the stock price dips or buying overpriced shares when an upward trend appears.
Companies meeting these criteria are out there, and contrary to popular belief, they aren’t dull and uninspired. Some of the best stocks to build wealth are on the cutting edge of technology. They are developing the products and services that will define the future, including cloud computing, Artificial Intelligence (AI), and the Internet of Things (IoT).
These are three of the best stocks to build wealth for disciplined investors who are ready to buy and hold for the long haul.
Will Alphabet Stock Go Up?
When Alphabet stock dropped sharply in 2022, it came as quite a shock. After all, Alphabet is parent to Google, the global leader in search engines.
Google’s near-monopoly on most of the world’s search engine traffic makes it a top choice for digital advertising. Even in a down year like 2022, the company saw $280.88 billion in total revenue. Roughly 78 percent of that came from digital advertising on Alphabet’s Google, YouTube, and Android platforms.
Fortunately, the 2022 decline was short-lived. Alphabet was impacted by the same factors that brought the entire tech sector down – high inflation, rising interest rates, and recession fears – and when those external pressures began lifting, so did Alphabet’s stock price.
Since the start of 2023, Alphabet stock has made steady gains. Already, it is up more than 30 percent year-to-date.
Aside from the continued success of Google’s search engine, Alphabet has several promising projects in the works. It rolled out a test version of Bard, an Artificial Intelligence chatbot that is intended to compete with Microsoft’s ChatGPT.
Bard hasn’t been perfected quite yet, and it’s not as popular as ChatGPT. Nonetheless, most agree that the brilliant minds behind Google technology are certain to have a winning AI platform before long.
Meanwhile, Alphabet is working on growing its cloud computing unit, which currently sits in third place behind Amazon Web Services (AWS) and Microsoft Azure.
However, Google Cloud is growing steadily, and in the first quarter of 2023, it had an operating profit for the first time in its history. Google Cloud grew its revenue by 28 percent year-over-year in the first quarter, which resulted in an operating profit of $191 million.
Demand for cloud computing services was already expected to increase substantially through 2030, and the introduction of AI for mainstream use will strengthen that demand. Cloud computing is a must for the implementation and use of AI tools, and all of the top three cloud computing platforms combined don’t have the capacity to meet near-future needs quite yet.
Though Alphabet stock has gone up since its 2022 lows, most analysts agree that it’s still a good value. In fact, some believe it is undervalued. Either way, now is the right time to buy Alphabet stock, and then hold it long-term to build a robust portfolio.
Will Amazon Stock Recover?
When the rest of the tech stocks dropped in 2022, Amazon went down alongside them. Like most of the digital companies that saw a boom during the 2020-21 years, Amazon’s revenues went down once consumers were able to resume normal life post-pandemic.
High inflation and rising interest rates didn’t help matters. When consumers cut back on spending, Amazon was impacted. However, the stock has come roaring back in 2023, and most analysts expect that trend to continue.
Amazon remains the best-known e-commerce site, and it has a commanding share of the US market. It holds a respectable share of the global e-commerce market, as well, and e-commerce still hasn’t achieved its full potential.
As of first-quarter 2023, only 15.1 percent of retail sales in the US were completed online. The global figure isn’t much higher. But e-commerce is expected to increase at a compound annual growth rate (CAGR) of 13.6 percent through the end of the decade, and Amazon is sure to play a pivotal role as e-commerce expands.
As if its substantial lead in e-commerce wasn’t enough, Amazon has cornered the cloud computing market as well. Amazon Web Services (AWS) is almost as big as its next two competitors – Microsoft Azure and Google Cloud – combined. AWS has more than a third of total market share.
In short, Amazon might have a down year once in a while, but the company is on a long-term growth trajectory. It is the biggest player in multiple large, lucrative markets that are expected to expand further in the years to come. That makes Amazon stock a smart buy for building wealth.
Is Berkshire Hathaway Stock A Buy?
On the surface, Berkshire Hathaway doesn’t seem to have the glamor of tech stocks like Alphabet and Amazon. It rarely invests in exciting new IPOs, and its leadership team consists of two men in their 90s.
However, a closer look reveals that Berkshire Hathaway is, in fact, on the cutting edge of new technology. It’s just very careful about which technology it sinks money into.
For example, Berkshire Hathaway’s massive stock portfolio has billions in Apple stock. Berkshire Hathaway also has investments in the Chinese electric vehicle manufacturer BYD and several computer chip makers.
Chairman and CEO Warren Buffett is open to investing in tech – he simply applies the same rules to tech companies that he uses for other investments. Buffett ensures that the companies have the financial stability and resources to withstand changing economic conditions, and he looks for a wide moat or sustainable competitive edge.
In addition to its robust stock portfolio, Berkshire Hathaway has dozens of wholly-owned subsidiaries, including financial services companies, real estate companies, and a variety of retailers. Some of these include Fruit of the Loom, Dairy Queen, Pampered Chef, and Geico.
Buying a share of Berkshire Hathaway stock has some of the same benefits as a mutual fund or exchange-traded fund in that each share represents a diverse mix of assets managed by the “Oracle of Omaha” himself. There’s no doubt that Berkshire Hathaway stock is a buy for anyone working to build wealth.
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