Key Takeaways
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Most companies will feel some impact from inflation and other economic factors, but those with resilient models typically manage to navigate tough conditions better.
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Even as Microsoft advances in AI, its core business remains quite profitable.
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Mastercard, due to its revenue structure, is less prone to certain pressures, allowing investors to benefit even when consumers are tightening their belts.
Growth stocks that show solid fundamentals and can maintain or boost pricing power during inflation are sought after by those looking to beat the market in the long run. That said, investing in growth stocks amid high uncertainty calls for patience and a long-term view, as market ups and downs are to be expected.
With that perspective, here are two growth stocks that appear appealing for long-term holding, particularly given their resilience and potential for strong returns, even in challenging inflationary environments.
1. Microsoft
Microsoft (NASDAQ: MSFT) has consistently performed well, particularly over the past decade. Its diversified revenue streams and robust ecosystem have helped the company adapt and maintain profitability. A significant portion of its revenue, nearly 40% in fiscal 2025, comes from its intelligent cloud segment, particularly the growing Azure platform, fueled by AI workloads. It’s noteworthy that enterprise cloud spending tends to remain stable, even during downturns.
Another revenue driver is the Productivity and Business Processes division, which includes the subscription service Microsoft 365 and LinkedIn, making up over 20% of sales. The integration of products like Windows and Azure into core operations makes switching away from Microsoft costly and disruptive for customers.
Under CEO Satya Nadella, Microsoft transitioned from a desktop software licensing model to a cloud-focused business. This strategic pivot has positioned the company for long-term growth. More recently, significant investments in AI are starting to pay off and form an integral part of its future strategy.
Financially, Microsoft has shown remarkable strength, ending fiscal 2025 with a 15% revenue increase to $281.7 billion and a 16% net income rise to $101.8 billion. The intelligent cloud segment, particularly Azure, was a key contributor, showcasing 34% year-over-year growth driven by AI services.
While its dividend yield is less than 1%, Microsoft has raised dividends for 23 consecutive years, a testament to its healthy cash flow and ability to invest in growth sectors like AI and cloud services. Dividends constitute a small portion of profits, indicating room for future increases, and the company bought back around $18.4 billion worth of stock in fiscal 2025. It’s seen as a solid long-term investment for potentially outperforming the market.
2. Mastercard
Mastercard (NYSE: MA) has consistently outperformed the market, with a total return exceeding 500% over the last decade, compared to the S&P 500’s roughly 290%. The efficiency of its core business model positions Mastercard to continue benefiting long-term investors.
The company earns fees based on a percentage of transaction values processed on its network. When inflation drives up prices, the total transaction volume increases correspondingly, allowing Mastercard’s revenue to rise without increasing its fees. Its low-capital, digital business model ensures that increased transactions translate into higher profit margins.
Unlike banks that extend credit, Mastercard avoids the associated credit risks, which can be particularly relevant during inflationary periods when default risk rises. It also benefits from a powerful network effect, as the more merchants and banks adopt Mastercard, the more valuable it becomes.
Mastercard is transitioning beyond its traditional card network into a data-driven technology enterprise, investing in cybersecurity, fraud prevention, and data analytics to benefit its partners. Revenues from value-added services have been growing faster than its core payments business.
In the second quarter of fiscal 2025, Mastercard outperformed analyst expectations, reporting net income and revenue growth. The company also continues to reward shareholders with stable dividends, appealing to growth-focused investors seeking income alongside capital appreciation.
Should you invest $1,000 in Microsoft right now?
Before considering an investment in Microsoft, it’s worth noting that some analysts have pointed out alternatives. Some growth stocks recommended by investment experts are believed to provide substantial returns in the near future, and Microsoft isn’t always included among the top choices.
For instance, investors who chose to invest in companies like Netflix or Nvidia when recommended have seen substantial returns since the recommendations were made. The key takeaway is that diversification and a broader search for potential high-return stocks can enhance an investment strategy.
