Young investors, like those in the Millennial, Gen Z, or even Gen Alpha cohort, should embrace growth stocks while time is still on their side. Undoubtedly, the artificial intelligence (AI) revolution is entering another new year.
And with promises of earnings-driving applications, many investors may be inclined to pay for multiples that are just a tad on the high end of the historical range if it means gaining a front-row seat to an innovator that can best seize the unique generational opportunity at hand. Indeed, many of today’s young people wish that our parents got into one of those mega-cap growth sensations many decades ago (think any one of the Magnificent Seven plays).
Though some of our parents may have gotten into some generative growth names, odds are they cashed out a bit early and missed the rest of the run. That’s why I’m a huge advocate for Charlie Munger’s old-fashioned buy-and-hold investing style.
Buy growth and hold for the long haul!
Sure, you can make a huge profit by getting out after a solid run. But there’s always a risk that you’ll miss out on what could be many, many years’ worth of continued gains. If the technology in question is profound, you may very well have a company you can buy and hold for years and decades at a time. Indeed, sitting on your hands can be tough, especially as market volatility intensifies.
Either way, I’m a huge fan of playing the extremely long game regarding generational growth stocks, even if it means holding on at times of mild overvaluation.
Indeed, if growth is on track and there’s a secular tailwind at hand, perhaps holding is the best course of action. After all, many analysts on Wall and Bay Street tend to go for “hold” (or equal-weight) ratings before the rare “sell (underweight) rating. Either way, let’s check in on a growth stock that young investors may wish to buy today, even if their parents missed the boat!
Microsoft
Microsoft (NASDAQ:MSFT) was one of the heavy hitters back in the day. Many decades later, Microsoft is still in the conversation as one of America’s most prominent and brightest tech innovators. Indeed, AI has been a massive focus for the firm as it looks to unlock growth from the latest generational growth driver.
If the multi-trillion-dollar enterprise software behemoth succeeds in AI as it did in the rise to the cloud, the rewards could have the potential to be significant. Either way, Microsoft always seems to find a way to defy the odds and continue to grow in spite of its size and age. In many ways, corporate longevity is baked into corporate governance.
As the firm looks to spend around $80 billion on AI efforts in 2025, it will be interesting to see how it can differentiate itself in the AI scene. At less than 35 times trailing price-to-earnings (P/E), the $3.2 trillion titan looks like a great buy for the next 10 years or more. Your parents may have missed the name, but there’s still a chance for you to punch a ticket as the next period of the AI game plays out.
