2 Unstoppable Stocks That Can Outperform the S&P 500 by 2030

A common theme of these AI shopping features and management's focus on cost reduction is that they encourage customers to shop on Amazon more often. AI makes it easier to find what you're looking for, and lower costs mean Amazon can sell more items at even lower prices.

These initiatives increase Amazon's competitive advantage and make the company truly unstoppable. Improving retail margins, as well as rising non-retail services profits, can potentially generate enough bottom-line growth to double the share price within the next five years and outperform the S&P 500 index.

Alphabet's Google is a ubiquitous brand. Millions, if not billions, of people use products like Gmail, Chrome, Android, YouTube and Google Search. The company has a world-class advertising service that monetizes these products and helps boost Alphabet's total revenue to $339 billion last year.

Thanks to a healthy market for digital advertising, Google was able to increase its revenue by a significant double-digit rate. One of the most powerful tools to keep users engaged with its products and generate more advertising revenue is AI.

Google Search has introduced AI overviews, resulting in more searches. Of course, more searches can lead to more advertising revenue. The company has merged AI Overviews with Lens (Google's visual search tool), giving users powerful new ways to find information and products online.

Like Amazon, Alphabet is able to invest in AI while controlling costs. Profits have grown significantly faster than sales this year, and the Wall Street consensus currently expects Alphabet's profits to grow at an annual rate of 16% in the coming years.

Additionally, Alphabet does not control costs at the expense of investing in the future. The company spent $49 billion on capital expenditures last year, including data centers and AI infrastructure, but still generated free cash flow of $55 billion. Alphabet is drowning in cash, with $93 billion in cash and marketable securities and just $12 billion in long-term debt on its balance sheet.

The Google owner is a rock-solid company. The stock's forecast P/E ratio is just under 21, which seems like a bargain for this leader in digital advertising and AI, which is expected to grow earnings by double digits over the long term. The shares are expected to deliver a return commensurate with the company's underlying earnings growth, causing Google shares to double within five years.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Amazon. The Motley Fool has a disclosure policy.

“2 Unstoppable Stocks That Can Outperform the S&P 500 by 2030” was originally published by The Motley Fool