Recently, I was thinking about what in my Stocks and Shares ISA and Self-Invested Personal Pension (SIPP) I’d hold on to if I couldn’t touch these investment accounts for 10 years. My goal was to assess the true long-term conviction I have in my current holdings.
It wasn’t an easy exercise. Because today, technology’s reshaping industries at an alarming pace and all kinds of companies in my portfolio are seeing their business models disrupted.
However, I did identify a handful of businesses I’m confident will still be dominating in a decade’s time. Here’s a look at two of them (they also happen to be my two largest holdings).
Amazon
First up, we have Amazon (NASDAQ: AMZN). It’s a diversified technology company today with operations in online shopping, cloud computing, digital advertising, artificial intelligence (AI), and many other areas of tech.
There are several reasons I have conviction in the long-term staying power of this business. One is that it has many ways to win. Even if one area of its business gets disrupted by a competitor or new technology in the years ahead, it could still do well.
Another reason is that it has a history of innovation. This isn’t a company that sits still. I believe that it will evolve significantly as the world becomes more technological (we’re likely to see a lot of AI from Amazon).
A third reason is that it has significant market share in its major industries. Today, it’s the largest player in online shopping and cloud computing globally and the third-largest player in digital advertising. So it has the financial firepower to acquire smaller companies with new technologies.
Of course, there are no guarantees that Amazon will continue to be successful. In the years ahead, it’s likely to face intense competition in all the industries it operates in.
To my mind, however, it has all the right ingredients to be a long-term winner. I plan to hold it for a long time and I think it’s worth considering as a long-term investment today.
Microsoft
Another company I’m optimistic will still be a dominant force in 2035 is Microsoft (NASDAQ: MSFT). It’s a diversified technology company that offers solutions in relation to business software, cloud computing, AI, and video gaming.
Microsoft has a powerful competitive advantage (economic moat) because so many businesses around the world use its software (Word, Excel, etc). Given its industry dominance in the business productivity space, it’s unlikely to disappear any time soon.
Meanwhile, it’s also a major player in cloud computing (it’s the second-largest player globally behind Amazon). With this industry forecast to grow by around 10%-15% a year between now and 2035, the firm is well placed for success here.
Additionally, like Amazon, it’s an innovator. Currently, it’s rolling out powerful AI features such as Copilot – a software service designed to help humans be more efficient.
Now, a scenario in which CEO Satya Nadella leaves the company is a risk here. He has been a brilliant leader over the last decade and transformed the company into a technology powerhouse.
Overall, however, I like the long-term risk/reward proposition. I think this stock is worth considering for the long run, especially if it pulls back 5%-10% in the near term.
