Exactly 5 years ago, the world struggled to deal with a black swan event: the COVID-19 pandemic. There was so much uncertainty that people didn’t even know if they’d be alive in the next few weeks, let alone figure out where the market was heading. Anyone who invested in the S&P 5 years ago would have gained 83%. If you had bought at the exact bottom, you’d have gained twice that amount.
What the above proves is that the present isn’t necessarily an indicator of what the future holds. All companies that had their workflows disrupted have recovered, some more than others. Some companies have strengthened their supply chains. Others have improved their work-from-home capabilities. Industries like airlines and restaurants have modified their business models to cater to the new dynamics.
These companies have been able to deal with the changing dynamics because of their financial strength and innovation. A company’s past performance and its finances give a good idea of whether it will be able to survive bad times. That’s why when we look at the best mega-cap stocks to hold for the next 5 years, we look at how well they have grown in the last 5 years.
To come up with our list of top 20 mega-cap stocks to hold for the next 5 years, we considered stocks with a market cap of at least $200 billion and a 5-year sales growth rate of at least 10%.
20. Netflix, Inc. (NASDAQ:NFLX)
Netflix, Inc. is an entertainment services provider that offers feature films, TV series, games, and documentaries in different languages and genres. The company also provides members access to watch online content through TVs, TV set-top boxes, digital video players, and mobile devices. The company has grown its revenue by 14.25% over the last 5 years.
A few years ago Netflix was losing subscribers, raising concerns among shareholders. However, it has achieved an impressive turnaround by gaining 19 million subscribers in just the recent quarter. The company also grew its revenue by 16% YoY in Q4. The most interesting thing is its operating margins which went up from 21% to 27%, indicating that the company is retaining a greater portion of its revenue as earnings.
NFLX showed its capability of making profits by generating net cash of $1.5 billion from operating activities in the last quarter. The cash flows are not only helping with the stock buybacks but also bringing greater efficiency to the company’s content creation processes, which are capital-intensive by nature.
19. Microsoft Corporation (NASDAQ:MSFT)
Microsoft Corporation is a developer and supporter of software, devices & solutions, and services. The company operates through Intelligent Cloud, More Personal Computing, and Productivity & Business Processes segments. The company has grown its revenue by 14.4% over the last 5 years.
Microsoft’s stock has suffered due to the Chinese AI startup Deepseek and unlike some other major tech stocks, hasn’t been able to recover. The software company also announced its earnings a couple of days later, exceeding estimates. What the market did not like was the guidance for the ongoing quarter, which was below the expected numbers. The company’s cloud business is facing challenges, both at the supply chain level and the execution. However, the AI business is expected to do $13 billion in annualized revenue. This is still a fraction of the amount of money the company has spent, and plans to spend, on its AI infrastructure in the coming years.
Last week, MSFT announced setting up a data center in Poland for $700 million. The company already opened a data center in the same country in 2023, costing $1 billion. These investments are not only aimed at increasing the company’s computing power but also enhance the existing cooperation between the Polish army and the company.
18. Eli Lilly and Company (NYSE:LLY)
Eli Lilly and Company is a developer, explorer, and marketer of human pharmaceuticals. The company offers a wide range of products including Humalog, Zepbound for obesity, oncology products, Olumiant for rheumatoid arthritis, Basaglar, Cymbalta for depressive disorder, and other products. The company has grown its revenue by 15.54% over the last 5 years.
The company entered into a global licensing deal with South Korea’s OliX Pharmaceuticals that could be valued at up to $630 million. As per the agreement, Eli Lilly will offer financial assistance for the successful completion of the phase 1 trial of the company’s experimental MASH treatment.
The company also entered into a partnership with OpenAI to use AI for drug exploration. The collaboration will aid in drug discovery, an area many firms are focusing on since the emergence of AI.
Sales of the company’s flagship Mounjaro and Zepbound are expected to stay strong this year as well. With additional manufacturing capacity coming online, the company is expected to continue growing in the next 5 years.
17. Morgan Stanley (NYSE:MS)
Morgan Stanley operates as a financial holding company and provides different financial services and products to individuals, governments, financial institutions, and corporations. It operates in three segments; wealth management, institutional securities, and investment management. The company has grown its revenue by 15.80% over the last 5 years.
Morgan Stanley shareholders have a lot going their way at the moment. The company offers an attractive dividend yield at 2.81% with a dividend amount that has almost increased threefold in the last 5 years. The dividend strength is stronger than its peers by a long margin.
The only question investors should ask themselves when holding the stock for the next 5 years is if they’re overpaying for the stock today. The stock is at all-time highs and trades at a forward PE of 15.5 while the sector average is around 12. Yes, the stock is overvalued. However, with the Trump administration likely to be lenient on the banks in terms of regulation, 19 upward EPS revisions and a 100% YoY expected EPS growth rate, we believe the valuation is justified.
16. JPMorgan Chase & Co. (NYSE:JPM)
JPMorgan Chase & Co. is a financial services company that operates in Asset & Wealth Management, Consumer & Community Banking, and Commercial & Investment Bank segments. It provides deposit, cash management, auto loans, retirement products & services, financial solutions, and other products & services. The company has grown its revenue by 16.59% over the last 5 years.
The stock’s recent dip has made it attractive for long-term investors. It trades at a multiple just above 12 which coincides with the sector average, so the stock is by no means overvalued despite being near all-time highs. The strong Q4 performance has a lot to do with the multiple being so low. In the fourth quarter, the bank was able to keep its loan loss provisions low, decreasing 20% QoQ.
Just a few days ago, the bank announced that it was able to pull in $60 billion from clients in Latin America. After selling off all of the bank’s on-shore private banking business in the region, the company now only accepts clients with a minimum of $5 million. The fact that people continue to choose JPMorgan speaks volumes of its reputation. While a blowout quarter like the one just ended is hard to repeat, the bank should be able to sustain moderate growth going forward as all its business segments continue to show little weakness.
15. Alphabet Inc. (NASDAQ:GOOGL)
Alphabet Inc. is a platforms and products provider that operates in Google Cloud, Google Services, and Other Bets segments. Its products and services include Chrome, Google Drive, YouTube, AI infrastructure, data and analytics, and others. The company has grown its revenue by 17.30% over the last 5 years.
GOOGL’s stock price faced a decline after it released Q4 earnings results which were below estimates. Though the company recorded a 13% YoY increase in revenue, it was $200 million less than expectations. Despite that, the company continues to be a leader in tech, especially emerging AI technologies. Even though DeepSeek AI has rattled some investors since last month, the firm’s superior tech should be able to beat any similar competition to maintain its lead.
Alphabet also started paying dividends the previous year and also paid off some debt. Last year the company generated $72.764 million of free cash flows and distributed almost 100% of its FCF in the form of dividends and buybacks. It holds a dominant market position and the short-term downturn in the stock price should be taken as a rewarding opportunity, especially by the dividend growth investors. If the growth slows down, investors can rely on the management’s willingness to share profits with the shareholders, keeping the downside limited.
14. AstraZeneca PLC (NASDAQ:AZN)
AstraZeneca PLC is a biopharmaceutical company that explores, develops, manufactures, and commercializes prescription medicines. It supplies its products and services to specialty and primary care physicians. AZN distributes its products and services through local representative offices and distributors. The company has grown its revenue by 17.77% over the last 5 years.
UBS recently upgraded AstraZeneca from neutral to buy on improving growth prospects:
We like the diversified catalyst path for AZN, no longer dominated by Dato-DXd.
Dato DXd is a treatment for advanced-stage breast cancer and with its approval in January, the company continues to strengthen its portfolio of FDA-approved drugs. AZN estimated annual sales of $5 billion with this particular treatment and that seems to be on target. The company can now focus on the seven high-value drugs it plans to get to the market in 2025. Investors can expect multiple catalysts throughout the year, but due to the nature of drug trials, volatility is expected.
13. Amazon.com, Inc. (NASDAQ:AMZN)
Amazon.com, Inc. provides subscription & advertising services as well as in-store sale of consumer products through physical and digital stores. It operates in Amazon Web Services (AWS), International, and North America segments. AMZN also develops media content and manufactures and sells electronic devices. The company has grown its revenue by 18.31% over the last 5 years.
Few would doubt Jeff Bezos’ ability to bring in growth. Anyone who has backed the billionaire’s firm in the past has reaped great rewards and with the recent dip, investors have another chance to accumulate the company’s shares. The company’s retail business is making headlines as it just passed the largest retailer Walmart in terms of quarterly sales. The Q4 revenue for Amazon stood at $187.79 billion while Walmart was in second place with $180.55 billion. This was the first time a company beat Walmart in quarterly revenue since 2012!
In the fourth quarter, Amazon expanded its same-day delivery locations by 60%, now spanning across more than 140 metro areas. For the second year in a row, the company was able to lower per-unit costs thanks to automation and inventory optimization. These cost reductions help the company maintain long-term profitability though there are challenges in scaling this automation(an aspect that could significantly improve with the fast-paced developments in AI and robotics).
12. Novo Nordisk A/S (NYSE:NVO)
Novo Nordisk A/S is a manufacturer, researcher & developer, and distributor of pharmaceutical products. It operates through rare disease and diabetes and obesity Care segments. It offers products for obesity, rare blood disorders, cardiovascular, diabetes, rare endocrine disorders, and other therapy areas. The company has grown its revenue by 18.58% over the last 5 years.
NVO’s stock price fell after the CagriSema drug’s disappointing trial results. Despite strong earnings in the previous quarter, the share price has not recovered. Besides, last month the Amycretin trial results were released and stock showed an upward hike due to the satisfying results. Even though the drug won’t be available anytime soon as it is still in the early stages of testing, the long-term potential is quite clear.
Last year, the company increased its sales by 25% while operating margins also grew by 25%, raising the net profit by 21%. TD Cowen expects the company to be neck and neck in the weight loss drugs market with its semaglutide-based products Wegovy and Ozempic.
LLY and NVO are expected to remain the main drivers and beneficiaries of the market growth. But there are clinical and commercial lanes open to competition, and no dearth of market hopefuls vying for a spot as the diabetes and obesity landscape expands.
The company has a 45% market share in the weight loss market, behind only Eli Lily at 48%. This advantage should be strong enough for the company to fight off competition in the future.
11. Broadcom Inc. (NASDAQ:AVGO)
Broadcom Inc. is a developer, designer, and seller of different semiconductor devices. AVGO operates through infrastructure software and semiconductor solutions segments. It offers mobile device connectivity solutions, optical and copper physical layer devices, Ethernet switching and routing custom silicon solutions, and other products and services. The company has grown its revenue by 18.69% over the last 5 years.
Broadcom’s recent growth has come from its custom chip business, as hyperscalers switch from using generic GPUs for AI training to custom GPUs. This trend is unlikely to stop anytime soon and Broadcom is the leader in the segment by a long margin. The company also has a short-term positive trigger as the US government tries to figure out how to resurrect the struggling chipmaker Intel. Analysts at Piper Sandler believe that if Broadcom can get a piece of Intel’s products division, it will be a very lucrative deal for the company:
Assuming that AVGO management pays a premium to the current market cap and is able to turn this business around just as it has almost every other business that it has previously acquired, we think the numbers become extremely compelling.
With Broadcom’s expertise and track record, a potential acquisition even if it comes at a premium, will significantly boost the firm’s long-term potential, possibly helping it outpace the growth shown in the last 5 years.
10. Meta Platforms, Inc. (NASDAQ:META)
Meta Platforms, Inc. develops products that help people interact and share with family and friends through PCs, wearables, mobile devices, and other platforms. It operates in the Reality Labs (RL) and Family of Apps (FoA) segments. The company has grown its revenue by 19.06% over the last 5 years.
Some of META’s growth in the recent past has come on the back of success in implementing AI in its advertising business. However, Mark Zuckerberg’s AI plans are grander than just AI in advertising. He plans to have the best open-source AI models in the world and is investing heavily in making that dream a reality.
The company’s Llama model received 650 million download requests in 2024, with Meta AI crossing the 600 million daily active users mark by the end of the same year. Meta is making good use of this popularity by launching LlamaCon, a developer conference where Meta can launch its latest AI tools.
As in years past, we’ll share the latest and greatest in Meta Horizon updates, peel back the curtain on tomorrow’s tech, and give XR devs the tools they need to help build for the next computing platform today.
While it’s too early to say if the company’s ambitions will bear fruit, if you do believe in these ventures, the time to buy the stock is now as the company continues investing heavily into AI, with $65 billion expected to be poured into AI infrastructure in 2025.
9. ASML Holdings N.V. (NASDAQ:ASML)
ASML Holdings N.V. is a producer, developer, marketer, and seller of advanced semiconductor equipment systems. Its product range includes inspection systems, lithography, and metrology. The company has grown its revenue by 19.23% over the last 5 years.
ASML makes lithography machines that are a critical part of the semiconductor chips manufacturing process. They are so important that the US has placed export restrictions on the company in a bid to stop China from acquiring advanced lithography machines. While this may be detrimental to the business in the short term, it does give credibility to the quality of its technology. Semiconductors aren’t going anywhere and will always rely on these lithography machines.
The recent emergence of DeepSeek AI did raise questions of whether big investments in AI are worth it. These concerns were quickly laid to rest by the Big Tech which reaffirmed its commitment to planned AI infrastructure investments. If this trend continues, the ASML growth story should continue. The company comfortably beat analyst estimates in its Q4 earnings report thanks to spending on data centers and high-performance computing. Backing the company now is recommended if one intends to fully benefit from the long-term demand of the AI industry.
8. Salesforce, Inc. (NYSE:CRM)
Salesforce, Inc. connects customers and companies by offering customer relationship management (CRM) technology. It provides invoices, forecast opportunities, sales to store data, contracts, and other services. The company has grown its revenue by 19.62% over the last 5 years.
Salesforce stock is down considerably this month as we enter the earnings week, with the announcement set for 26th February. One is inclined to think the concerns sparked by DeepSeek AI may be causing the downturn, but analysts are optimistic the company’s AI story is only just getting started.
According to Wedbush Securities analysts, CRM is a clear beneficiary of AI-linked spending.
We believe CRM is a clear 2nd derivative beneficiary of the AI Revolution that could add ~$80 per share to the CRM story as this monetization story takes shape over the next 12 to 18 months, with Benioff & Co. leading the charge and this new era of AI growth.
The company already beat the higher end of its guidance in the third quarter and Q4 should be no different. While the business continues to stay strong, the management is also focusing on cost controls, the effects of which are already starting to emerge in the financial reports. The company’s EBIT is already reaching the 20% mark, the highest ever in its history. The operating margin of 33% is also helping the company translate more of its revenue into profit. With the AI tailwinds and management’s shareholder-friendly policies, the company will remain a strong investment for the next 5 years.
7. Alibaba Group Holding Limited (NYSE:BABA)
Alibaba Group Holding Limited is a marketing reach and technology infrastructure provider to brands, businesses, merchants, and retailers. It operates in Local Consumer Services, China commerce, Digital Media and Entertainment, International Commerce, and other segments. The company has grown its revenue by 19.89% over the last 5 years’.
Chinese tech stocks are enjoying a great run at the moment and BABA is already up 68% this month. The massive run is coming on the back of optimism surrounding China’s AI technologies, which continue to impress the world even if some are skeptical about them.
If investors are looking for a long-term AI investment, BABA ticks a lot of boxes. The company’s CEO has gone as far as saying that artificial general intelligence (AGI), is the primary objective of the firm’s AI ventures.
So when it comes to Alibaba’s AI strategy, our first and foremost goal is to pursue AGI. The pursuit of AGI is our primary objective. We aim to continue to develop models that extend the boundaries of intelligence.
These aren’t just meaningless words. They’re backed by the company’s technology. BABA’s Qwn2.5-VL model beats some of the models of top American tech companies in video analysis, document analysis, and math. This advancement in AI is also likely to spur the company’s e-commerce business in the same way Mark Zuckerberg was able to drastically improve Meta’s advertising business while building AI models. At a forward PE of 14, the stock is a compelling investment.
6. The Goldman Sachs Group, Inc. (NYSE:GS)
Goldman Sachs operates as a financial institution and offers various financial services to individuals, financial institutions, corporations, and governments. It operates in Asset & Wealth Management, Global Banking & Markets, and Platform Solutions segments. The company has grown its revenue by 20.29% over the last 5 years.
A 61% performance in the last year means people are asking if the stock has already run up too much. There are reasons to believe that new all-time highs will be registered in 2025 and beyond, making the stock an attractive buy. The bank is expected to grow its earnings by 18% this year and 13% next year. This growth prospect makes it an attractive proposition compared to other banking stocks even at all-time highs.
The main drivers of the bank’s earnings are its Global Banking segment and the Asset Management segment. Both these segments are going strong and expected to stay strong going forward, with the Asset Management part of the business not only bringing stability but also growth over the next few years. Higher interest rates could spell trouble for the company though so even though GS is an attractive investment for the next 5 years, investors will need to keep a close eye on the Fed’s interest rate policy while they hold the stock.
5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Taiwan Semiconductor Manufacturing Company Limited is a manufacturer, tester, packager, and supplier of ICs and other semiconductor devices. It offers various wafer fabrication processes and customers, manufactures masks, engineering support services, and other products and services. The company has grown its revenue by 22.25% over the last 5 year.
TSM is a leader in semiconductor manufacturing. If there is demand for semiconductor chips, TSM will benefit. Intel’s manufacturing debacle also shows that TSM has a moat and running a foundry isn’t everyone’s cup of tea. With such a strong moat, the stock would be part of any long-term portfolio.
Some investors worry about geo-political tensions weighing down on the stock. These fears are justified. However, TSM is increasing its presence in the US and has the US government’s support in doing so. In fact, it is one of the favorites to acquire Intel’s manufacturing segment, something that will help it diversify its manufacturing footprint outside Taiwan and hence out of the reach of any Chinese influence.
The stock trades at a forward PE of just under 20. The valuation is low compared to peers with a significantly smaller moat. If investors can keep the political concerns aside, this has the potential to be one of the best investments for the next 5 years.
4. ServiceNow, Inc. (NYSE:NOW)
ServiceNow, Inc. is a cloud based solutions provider to online workflows. It operates an AI platform for robotic process automation, analytics, digital transformation machine learning, process mining, and low-code development tools. The company has grown its revenue by 26.04% over the last 5 years.
NOW has been a consistent performer for years but it has accelerated its growth by helping businesses organize and automate IT services. Its Now Assist feature, which allows companies to use AI to automate tasks, has grown 150% QoQ! This demand continues to increase and if the management’s word is anything to go by, there is still substantial upside left in the stock:
We are seeing strong demand from customers using AI Agents to assist human agents with complex cases, automate tasks like understanding intricate requests, crafting execution plans, and implementing them within third-party systems.
The firm is seeing the return on its AI capex internally as well. Its AI-supported workflows have improved employee efficiency by 20% across multiple departments with AI Agents helping reduce customer support responses from an average of 4 days to 8 seconds. This type of exponential improvement sets up the company well for future growth as AI Agents start going mainstream.
3. Palantir Technologies Inc.(NASDAQ:PLTR)
Palantir Technologies Inc. is a developer and deployer of software platforms for big data analytics. It serves different industries including intelligence & defense, healthcare, and commercial. The company has grown its revenue by 31.48% over the last 5 years.
Panatir was the best performer in the S&P 500 last year and is on course to repeat the same this year but a sell-off in the last 3 days, where the stock has lost 23% of its value, has spooked investors. We believe this is a great opportunity to take a position in the stock which by all measures is overvalued, but for good reasons.
The stock’s market cap is currently $230 billion but it is already being touted as the next trillion-dollar company. Wedbush analyst Dan Ives, who believes the era of AI software has finally arrived and Palantir is set to be the beneficiary, is particularly bullish on the company’s long-term prospects:
The AI Software era is now here in our view. We believe the two best software plays on the AI Revolution for 2025 remain Palantir and Salesforce.
Ives believes people are underestimating the amount of capex that will go into building AI use cases. The hyperscalers take all the attention for now but once companies start working on building AI use cases together with the government, we could see a once-in-a-generation type of spending that could amount to $2 trillion in the next 3 years! The current dip provides the perfect opportunity to take a position in the stock.
2. Tesla, Inc. (NASDAQ:TSLA)
Tesla, Inc. is a developer, designer, manufacturer, lessor, and supplier of energy storage & generation systems and electric vehicles. It operates through energy generation & storage and automotive segments. The company has grown its revenue by 34.02% over the last 5 years.
Elon Musk’s political shenanigans may be taking center stage right now but pretty soon the focus will switch back to how he plans to execute Tesla’s AI and robotics plans. Many believed his political influence would help him get the regulatory approval to get Tesla’s robotaxis on the roads and that is what’s about to happen in Austin, Texas. We may see Tesla’s robotaxis in Austin as early as June 2025 with a national rollout set for 2026, assuming initial success and regulatory approvals. The short-term triggers will continue to revolve around the launch in Austin this year.
We could also see Tesla’s Optimus robot in action this year as Musk continues to improve the AI offerings of his company xAI. Tesla has more cash than debt and with a leadership position in autonomous driving and robotics, it can easily fit into any portfolio.
1. NVIDIA Corporation (NASDAQ:NVDA)
NVIDIA Corporation is a compute & networking and graphics solutions provider that operates through the graphics and compute & networking segments. It supplies its products to system integrators and distributors, consumer internet companies, distributors, original equipment manufacturers, and others.
The emergence of SeepSeek AI forced people to question Nvidia’s expensive technologies and whether they were really needed. There was a moment when everyone thought the huge investments in nuclear energy and GPUs would go to waste if AI models could be trained cheaply. However, Nvidia’s innovation, ecosystem, and financial strength, together with the support of a strong US government that seems determined to win the AI race against China should be enough to negate the doubters.
The short-term effects of DeepSeek may be forgotten as soon as 26th February when the company announces its earnings. Long-term investors should, however, keep an eye on how Broadcom and Marvell progress, two companies that make custom GPUs that are more attractive for hyperscalers to perform their repetitive and high-performance AI training requirements.
Nvidia is 5th on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 223 hedge fund portfolios held NVDA at the end of the fourth quarter which was 193 in the previous quarter. While we acknowledge the potential of NVDA as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
