Amazon and Microsoft Top Picks for Young Investors
The S&P 500 has consistently delivered returns of 10.7% since its inception in 1957, making it an attractive option for long-term investors.
However, young investors with time on their side may be willing to take on more risk in pursuit of higher returns, and two tech giants stand out as top picks: Amazon (AMZN) and Microsoft (MSFT).
Amazon's stock has skyrocketed by 338,180% since its IPO in 1997, with a compound annual return of 32.3%, thanks to emerging technologies like artificial intelligence (AI). The company's flagship e-commerce platform hosts over 600 million products, and its AWS cloud platform offers hundreds of tools for businesses.
AWS has become the centerpiece of Amazon's AI strategy, operating data centers worldwide with thousands of specialized AI chips from suppliers like Nvidia. Amazon has also designed its own chips, including Trainium3, which deliver better price-performance than the competition.
The AWS Bedrock platform offers hundreds of ready-made models to accelerate AI software projects, and usage tripled sequentially in Q2 2026. With a $496 billion order backlog from customers waiting for more data center capacity, Amazon looks like a great long-term investment with a forward P/E ratio of 24.4.
Moving on to Microsoft (MSFT), the company developed Copilot, an AI assistant embedded in legacy software products like Windows and Edge. Businesses can add Copilot to the 365 productivity suite for an additional subscription fee, where it accelerates workflows in applications like Word and Excel.
The company has a distinct advantage over AI start-ups like OpenAI and Anthropic due to its large existing customer base. Azure, Microsoft's cloud platform, competes directly with AWS by offering similar AI services. With 88 new data centers built over the last 12 months alone, Azure had a whopping $678 billion order backlog from AI customers waiting for more computing capacity.
Much like Amazon, Microsoft is trading at a relatively attractive valuation with a forward P/E ratio of 25, making this a great entry point for long-term investment.