Buying and holding shares of solid companies for a long time is a great way to make money in the stock market. This strategy not only allows investors to benefit from the power of compounding, but also enables them to capitalize on secular growth trends.
For instance, a $1,000 investment in the Nasdaq-100 Technology Sector Index a decade ago would now be worth more than $5,200, as evident from the chart below.
^NDXT Chart
The index has benefited from multiple secular growth trends over the past 10 years, ranging from the robust demand for 5G smartphones to the advent of connected vehicles to an increase in remote work, which led to stronger sales of computers and workplace collaboration software. And now technology stocks are benefiting big time from the proliferation of artificial intelligence (AI).
AI is impacting multiple industries already, and is expected to contribute a generous $15.7 trillion to the global economy by 2030. That’s why now would be a good time to take a closer look at Micron Technology (NASDAQ: MU) and Applied Materials (NASDAQ: AMAT).
Both companies are playing critical roles in driving AI adoption. So if you have $1,000 to spare for investing after paying off your bills, clearing high-interest loans, and saving enough for bad times, it may be a good idea to put that money into these two stocks. Let’s look at the reasons why.
1. Micron Technology
Micron Technology has turned out to be a terrific investment over the past decade, turning a $1,000 investment into just over $4,600 as of this writing. That’s impressive considering that Micron is a manufacturer of memory chips, a market that’s known for being cyclical.
The good news for Micron investors is that the memory industry seems set for a sustained period of solid long-term growth thanks to AI. Micron’s peer SK Hynix recently pointed out that the demand for the high-bandwidth memory (HBM) that’s deployed in AI chips could increase at an annual rate of 60% in the mid to long term.
Micron is already reaping the benefits of AI-driven growth in the memory market. Its revenue in the second quarter…
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