Key Points

• Buying an S&P 500 index fund is one of the surest ways to build wealth in the stock market.

• But young investors have time on their side, so enduring a little more volatility in pursuit of higher returns might be a worthwhile trade-off.

• Building a portfolio of 50 individual stocks could yield great results over the long term, and I'll share two stocks to start with.

• These 10 stocks could mint the next wave of millionaires ›

The S&P 500 (SNPINDEX: ^GSPC) is an index of 500 companies from 11 different sectors of the U.S. economy. It has produced a compound annual return of 10.7% since its establishment in 1957, even after accounting for every sell-off, correction, and bear market along the way. Therefore, buying an S&P 500 index fund is one of the surest ways investors can build wealth over the long term.

But young investors have time on their side, so they can afford to take on a little more risk in pursuit of higher returns. A portfolio of around 50 individual stocks will typically experience more volatility than the S&P 500, but that might be a worthwhile trade-off considering tech giants like Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) have obliterated the index since going public:

Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »

• Amazon stock has soared by 338,180% since going public in 1997, translating to a compound annual return of 32.3%.
• Microsoft stock has surged by 676,310% since going public in 1986, translating to a compound annual return of 24.7%.

Thanks to emerging technologies like artificial intelligence (AI), Amazon and Microsoft likely have plenty of growth left in the tank. If I were a young investor in my 20s today, here's why I'd buy both stocks and hold them forever.

The first stock I'd buy: Amazon

Amazon started out by selling books over the internet, which was a revolutionary concept in the 1990s. Its flagship e-commerce platform, Amazon.com, now hosts over 600 million products, and it remains the company's largest source of revenue. But investors have been more interested in the Amazon Web Services (AWS) cloud platform over the last decade, as it offers hundreds of tools to help businesses thrive in the digital age.

Over the last three years in particular, AWS has become the centerpiece of Amazon's AI strategy. It operates data centers worldwide that house thousands of specialized AI chips from suppliers like Nvidia, but Amazon has also designed its own chips, including Trainium3, which deliver significantly better price-performance than the competition.

Amazon's chip business already has over $25 billion in annualized revenue, but hardware is only one part of the AWS story. Developers also need access to ready-made models to accelerate their AI software projects, and the AWS Bedrock platform offers hundreds of them, including those from labs like OpenAI and Anthropic. AWS also has its own AI coding assistant, Kiro, and usage tripled sequentially during the second quarter of 2026.

AWS is Amazon's fastest-growing business, with revenue increasing by 37% in the second quarter. The platform has generated $148 billion in revenue over the last four quarters, but Amazon CEO Andy Jassy thinks it could generate $1 trillion per year in the future. That sounds like a big number, but it currently has a whopping $496 billion order backlog from customers waiting for more data center capacity to come online.

As a result, Amazon looks like a great long-term investment. And with a forward price-to-earnings (P/E) ratio of 24.4 (based on 2027 earnings estimates), it's trading in line with the Nasdaq-100 index, which has a forward P/E of 24.2, so I would say investors are buying a great business at a very fair price.

The second stock I'd buy: Microsoft

Microsoft developed an AI assistant called Copilot and embedded it in legacy software products like Windows, Bing, and Edge for free. But businesses can also add Copilot to the 365 productivity suite for an additional subscription fee, where it can accelerate workflows in applications like Word, Excel, PowerPoint, and Outlook.

As of June 30, organizations around the world were paying for 30 million Copilot for 365 licenses, a 50% increase from March 31, just three months earlier. But that represents a mere fraction of the 400 million 365 licenses in circulation, so Copilot could eventually generate billions of dollars in annual recurring revenue when attached to this one product suite alone.

Selling Copilot to such a large existing customer base gives Microsoft a distinct advantage over AI start-ups like OpenAI and Anthropic, which must build their customer bases from scratch.

Microsoft also has Azure, a booming cloud platform that competes directly with AWS by offering a similar portfolio of AI services. The company built 88 new data centers over the last 12 months alone, as part of a two-year plan to double its global infrastructure footprint. But it will have to continue building aggressively because, as of June 30, Azure had a whopping $678 billion order backlog from AI customers who were waiting for more computing capacity to come online.

Azure is Microsoft's fastest-growing business with revenue increasing by 43% in the June quarter, and that growth rate could accelerate as the platform fulfills its backlog.

Like Amazon, Microsoft is also trading at a relatively attractive valuation with a forward P/E ratio of 25, so this could be a great entry point for a long-term investment.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $577,856!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $64,119!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $387,158!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

*Stock Advisor returns as of September 21, 2026.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.