Netflix’s latest move reveals substantial opportunities to deliver returns to shareholders.
Microsoft’s cloud growth indicates a strengthening competitive position as AI demand grows.
10 stocks we like better than Netflix ›
Growth stocks are a reliable path for investors to build lasting wealth for retirement. Patiently holding shares of outstanding companies is the closest thing to putting your money on autopilot for long-term capital appreciation.
To support you on your wealth-building journey, here are two outstanding businesses that dominate their respective industries and remain solid stocks to buy in the new year and hold for a lifetime of compounding returns.
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Netflix(NASDAQ: NFLX) has been one of the best-performing growth stocks of the past few decades, and it enters 2026 stronger than ever. Following the idea that winners tend to continue winning, Netflix remains a solid choice. It’s growing revenue and profits at a healthy clip, as the streaming leader achieved record viewership in the United States and United Kingdom in the third quarter.
The pending deal to acquire Warner Bros is a bold move that could cement Netflix’s competitive position in the entertainment industry. It will add iconic film and TV content going back a century, along with HBO and HBO Max. That means Netflix could soon own the rights to Game of Thrones, the DC Universe, and Friends, which is just a small sample of the value this deal brings to Netflix.
The $82 billion offer is a good deal for Netflix, considering it spent $17 billion last year on content production. Netflix is buying a century’s worth of content for what it spends in five years. This additional content will make Netflix’s service more appealing to current and new subscribers.
It’s also a good deal for Warner Bros, as the film studio can leverage Netflix’s extensive financial resources and talent to better monetize its film library. Despite a competing bid from Paramount, Netflix is confident in closing the deal, given the potential to create a truly unstoppable entertainment juggernaut over the long term.
Even without the acquisition, Netflix would still be an excellent investment. Analysts were already expecting the company’s earnings per share to grow at an annualized rate of 23% over the next several years. However, the addition of Warner Bros will enhance Netflix’s long-term earnings growth prospects, as the company expects to realize approximately $2.5 billion in cost savings following the full integration of Warner Bros’ business.
With more than 300 million subscribers and growing, Netflix has a promising future ahead, making the stock a solid investment for 2026.
With artificial intelligence (AI) poised to transform businesses and entire industries, Microsoft(NASDAQ: MSFT) is well-positioned to lead the way. It all starts with its robust cloud computing infrastructure, with Microsoft Azure being one of the fastest-growing cloud platforms for enterprises.
The software leader continues to see robust demand for AI cloud services. Revenue from Microsoft Cloud, which includes Azure and other cloud services, hit $49 billion last quarter, up a solid 26% over the year-ago quarter. It also reported nearly $400 billion in remaining performance obligations — a year-over-year increase of 50% — signaling substantial and growing commitments from major enterprise customers.
The enormous number of commitments implies that Microsoft is seeing more demand for AI services than its available compute capacity can handle in its data centers. This is driving significant investment in hiring talent and securing more data center infrastructure. Microsoft has consistently earned high returns on invested capital, indicating that these investments should drive further earnings growth and increase the value of the stock over the long term.
CEO Satya Nadella said on the last earnings call that Microsoft is building a “planet-scale cloud and AI factory.” Its Azure AI Foundry is serving 80,000 customers. Companies are using Azure to develop their own AI software applications with their proprietary data. This helped drive a 40% year-over-year increase in Azure revenue last quarter, indicating a significant market opportunity.
Microsoft is fully committed to capitalizing on AI. With $147 billion in trailing 12-month operating cash flow, the company has the financial resources to invest aggressively in this transformative technology and widen its competitive moat.
Microsoft is one of the strongest companies you can invest in for the long term. It can make significant investments in AI infrastructure while continuing to pay regular dividends to enhance shareholder returns.
Before you buy stock in Netflix, consider this:
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*Stock Advisor returns as of December 29, 2025
John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft, Netflix, and Warner Bros. Discovery. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
2 Unstoppable Stocks to Buy in 2026 and Hold Forever was originally published by The Motley Fool
