In January 2024, Office 365 quietly reached 400 million paid seats. Microsoft (MSFT 0.26%) products are as integrated into our professional lives as meetings that could’ve been emails, but these “boring” and decades-old tools are the fuel Microsoft is using to compete in the artificial intelligence (AI) race.

As AI progresses and automates away chunks of the professional world as we know it, the legacy suite of Microsoft 365 products shows no signs of slowing down. This ability to quietly and reliably generate revenue is funding Microsoft’s riskier AI bets.

Office products generated $54.9 billion in fiscal year 2024 (the 12 months ended in June 2024). That was 22% of all of Microsoft’s revenue. Microsoft 365 will keep the company on the leaderboard of AI innovators for years to come. This is great news for long-term Microsoft investors.

Microsoft’s lagging AI strategy

Microsoft is still playing catch-up when it comes to generative AI. OpenAI leads with more than 200 million weekly active users and set the gold standard with the release of ChatGPT in 2022. Alphabet‘s Google and Meta Platforms both have models nearly equivalent to OpenAI.

Compared to these companies, Microsoft got a late start in deciding on an AI strategy. However, it has since closed the gap significantly by partnering with competitor OpenAI and, as of the end of 2024, was beginning to build models in-house.

Microsoft also purchased billions in Nvidia chips and continues to innovate on its cloud computing platform, Azure, and agentic powerhouse, Copilot. These strategic moves are, thus far, keeping pace with the other major players in the AI industry.

Microsoft requires immense amounts of capital to remain competitive in the AI landscape. Fortunately, its decades-old productivity and business lines are the stable engine propelling Microsoft into its new, automated era.

The Office moat

Normally, when one thinks of a legacy business, it’s of an outdated, shrinking portion of revenue. That is not the case with Microsoft’s Office products. Microsoft 365, including the applications Excel, Word, PowerPoint, Teams, and Outlook, is still growing by double digits year over year.

This indicates these product lines are not only here to stay, but are so universally adopted by businesses and individuals alike that it’ll be nearly impossible to dethrone them anytime soon.

These products are also mostly recession-resistant, as businesses are unlikely to cut them in an economic downturn. Microsoft also switched to a subscription model more than a decade ago, making revenue from these lines of business extraordinarily predictable and dependable.

The significant growth in the legacy products is also great news for the capital-intensive investments Microsoft will need to continue making for the next several years. Microsoft reports that it’s on track to invest approximately $80 billion to build out AI-enabled data centers for training and deploying AI models and applications.

Microsoft’s AI revenue is exploding

In its earnings call on July 30, Microsoft revealed Azure’s income for the first time: a whopping $75 billion, an increase of 34%, according to chairman and CEO Satya Nadella.

The CEO added, “Cloud and AI is the driving force of business transformation across every industry and sector. We’re innovating across the tech stack to help customers adapt and grow in this new era.”

Microsoft’s market cap is approaching $4 trillion, and there seems to be quite a bit of room left for growth, particularly if the company’s big AI bets pay off.

Microsoft remains a top competitor

For investors, Microsoft remains a solid long-term play, largely because of the stable products users have known for years. With a quarterly dividend of $0.91 per share, investors are rewarded on both the value and growth side, though the dividend yield is under 1%. Microsoft’s burgeoning agentic and innovative technologies will continue to produce massive revenue alongside mature, reliable products.

Overall, Microsoft’s total revenue increased 18% from Q4 2024 to Q4 2025. There’s plenty of risk associated with investing in AI technologies, but thanks to Microsoft’s steady lines of business, the downside is far less than that of many competitors.

Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Microsoft, and Nvidia. 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.

Meta Platforms (META 1.93%), one of the leading social media companies, went public in 2012. Since then, the stock has performed exceptionally well. Its returns over this period are well above those of broader equities. However, some might argue that it’s too late to get in on the bandwagon.

Meta Platforms is now worth almost $2 trillion. Can the stock still generate life-changing returns? Let’s find out.

The bullish case for Meta Platforms

Meta’s bread and butter is advertising. The company boasts a portfolio of social media brands that includes Facebook, Instagram, Messenger, and WhatsApp. It has more than 3 billion daily active users across these platforms as of the end of the second quarter of 2025. The sheer volume of Meta’s ecosystem makes it an attractive place to run ads, but the company goes even further.

It has access to a considerable amount of data from its users, including basic demographic information, interests, favorite celebrities, and much more. This enables the company to assist businesses in crafting ads that are carefully targeted toward specific audiences, making them highly cost-effective.

Meta Platforms’ strategy has been successful, as evidenced by its financial results. Second-quarter revenue increased 22% year over year to $47.5 billion, while earnings per share came in at $7.14, 38% higher than the year-ago period.

The company’s core advertising business will remain central to its results for the foreseeable future. And here is the good news: Meta is improving its ad business thanks to artificial intelligence (AI). On the one hand, it helps improve the ad launch process with AI-powered tools that assist businesses in crafting ads, including by generating relevant messages and images and further enhancing targeting. On the other hand, AI-powered algorithms are boosting engagement on the company’s websites and apps.

The result: Time spent on Facebook and Instagram has increased lately. And according to a study the company ran, AI-powered ad tools improved return on ad spend by 22%.Meta is looking to automate the ad process completely, which should lead to even greater gains. The company could perform well as it moves toward that goal. But what happens beyond advertising?

In my view, Meta Platforms’ greatest strength is its ecosystem and culture of innovation. With several billion users, the tech giant can develop various monetization schemes, only a few of which need to take off to have a meaningful impact on its financial results. Meta is gradually expanding into other avenues, including paid messaging on WhatsApp. The company is investing in AI glasses, which CEO Mark Zuckerberg believes will become the norm within the next decade.

Thanks to its core business, its vast ecosystem, and various other initiatives, Meta could still deliver market-beating returns over the next 20 years.

Some risks to consider

Meta Platforms may encounter some obstacles. For instance, the company is spending a small fortune on AI infrastructure. That could be a problem if its AI initiatives don’t have the impact it hopes they will, especially if we enter an economic recession. Consumers spend less — and so do businesses, including on advertising — when the economy is struggling. The combination of slower revenue growth (if ad spending decreases) and increased expenses due to Meta’s investments in AI could harm the company’s financial results.

Antitrust lawsuits could present another potential threat to Meta Platforms. Regulators in the U.S. have argued that Meta has a monopoly in the social networking space. These lawsuits are still ongoing. In the worst-case scenario, Meta may be forced to divest some of its assets. Do these potential challenges justify avoiding the stock? Not in my view. Meta proved it could navigate economic challenges a couple of years ago.

Amid growing expenses, declining user growth, and slower revenue increases, the company regrouped, cut costs, and emerged from the ordeal stronger than ever. Meta’s AI plans are, so far, yielding tangible results, and we haven’t seen all that the company can do in this area yet.

Regarding the company’s legal problems, while it’s worth keeping an eye on those, a potential and uncertain worst-case scenario shouldn’t deter investors from this robust, well-run business that is firing on all cylinders. It might be worth revisiting the question if Meta loses its antitrust case, but the stock’s prospects remain highly attractive as things stand.

Lastly, Meta is now a dividend stock — a fairly new development — and reinvesting the payout will boost what should already be superior returns over the long run. So can Meta Platforms set investors up for life? I think it can.

Hexcel (HXL -0.76%), a leading supplier of advanced composite materials, is best described as the “nearly” stock of the aerospace sector. However, its time will surely come, and its long-term growth prospects remain excellent. If you are prepared to be patient, then initiating a position when sentiment is against the stock could be a smart decision for a long-term investor. This stock could make you richer.

Why Hexcel is out of favor

There’s very little aftermarket demand for Hexcel’s carbon fiber composites, so any reduction in airplane production expectations at its two key customers — Airbus and Boeing — hits Hexcel hard. Approximately 40% of 2024 sales were allocated to Airbus and its subcontractors, while Boeing and its subcontractors accounted for 15%.

Unfortunately, both airline manufacturers suffered production shortfalls last year, and Airbus has already lowered its expectations for 2025, notably for the composite-rich A350 widebody, an airplane with a shipset value of $4.5 million to $5 million.

Unlike many of the other aerospace suppliers, Hexcel can’t fall back on aftermarket revenue (which tends to increase with new airplane deliveries) in such market conditions. It gets worse. The company geared up for new airplane deliveries last year, only to be disappointed, and that creates margin challenges in itself.

That’s the main reason Wall Street expects Hexcel to grow sales barely this year and for earnings per share to drop from $2.03 in 2024 to $1.87 in 2025.

Why Hexcel can recover

That said, no one should buy stocks based on a company’s current performance or its performance over the last 12 months, and this is particularly true in a long-cycle industry like aerospace. The reality is that the commercial aerospace supply chain appears to be improving, and the long-term outlook is highly positive for two major reasons.

Aerospace end markets are improving

First, CEO Tom Gentile served notice in the company’s quarterly press release that the market is improving, stating, “We are encouraged by the more positive tones and progress conveyed by the commercial airframe and engine OEMs in recent months.” He has a point. First, engine manufacturer GE Aerospace reported a 38% increase in LEAP engine deliveries in the second quarter (used on the Airbus A320neo family and the Boeing 737MAX), and is back on track for a 15%-20% increase in 2025.

Second, after a four-week stoppage, RTX CEO Chris Calio said he thought RTX’s Pratt & Whitney (manufacturer of the other engine option on the Airbus A320neo family) is “going to make that up in the balance of the year” with a second-half ramp. As for Boeing, Calio noted that “we are seeing stability in the rates at Boeing; they continue to grow with the focus there on the production system.”

The GE Aerospace and RTX news is particularly important for Airbus, as a lack of engines has caused delivery setbacks.

Long-term growth prospects

Hexcel’s potential for growth is encapsulated by comparing its current aircraft production rates with those of its key customers. As the table demonstrates, a significant amount of aircraft production and deliveries is expected to occur, as Airbus and Boeing appear to be behind schedule.

Data source: Boeing, Airbus delivery data, author’s analysis.

A stock to buy?

At some point, aircraft deliveries are expected to ramp up, taking Hexcel’s sales and margins with them. Moreover, every generation of new aircraft tends to incorporate more composites, resulting in increased shipset value opportunities for Hexcel.

The positive recent signs over production from both Boeing and the engine manufacturers (which could feed into a brighter production outlook at Airbus), are good news, and Hexcel is an attractive stock for long-term investors. I predict it could make investors big money.

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends GE Aerospace, Hexcel, and RTX. The Motley Fool has a disclosure policy.

Investors understand that when you extend your time horizon into decades with high-quality businesses, the power of compound growth can work wonders. This is why it’s so beneficial to be a long-term owner of companies, allowing their improving fundamentals to positively impact your portfolio. This strategy is far more consistently reliable than constantly trying to time the market.

With this perspective in mind, there are definitely some businesses that have generated tremendous wealth for their long-term shareholders. In fact, here’s one stock that over the course of the past 28 years would have turned a $1,000 initial investment into a holding worth more than $1 million.

Becoming one of the world’s dominant enterprises

Since this company’s initial public offering in May 1997, its shares have produced an unbelievable return of 217,000%. Had you been able to allocate $1,000 to this stock when it went public, you’d be staring at a balance of nearly $2.2 million today. 

The company in question is none other than Amazon (AMZN -1.38%). Its journey — characterized by constant innovation and pushing the envelope — has been nothing short of spectacular.

Amazon started out in the mid-1990s selling books online. While this was a narrow focus, it was a revolutionary idea at the time. The company wanted to stick to a product category that was easy and low-risk to ship, and one that had a massive selection of items for shoppers to choose from.

Over time, Amazon evolved to start selling virtually anything under the sun, and it continues to expand its footprint. In December, for example, the business launched a partnership that allows consumers to buy new Hyundai vehicles on its e-commerce site. The entire car-buying process, from arranging financing to scheduling the delivery from a nearby dealer, can be handled on Amazon.  

The company enticed shoppers to spend more money on its site by pioneering fast, free shipping, and offering it as a perk of its Prime membership program in 2005. Today, it is estimated that there are more than 200 million Prime members across the globe.

In 2006, the company began offering Amazon Web Services (AWS) to external customers. Management realized that other businesses might need solutions to scaling IT infrastructure based on changing needs — the same issue Amazon faced with its e-commerce operation. In 2024, AWS generated $108 billion of revenue and $40 billion of operating income. It is the world’s largest cloud-computing infrastructure provider and a major artificial intelligence (AI) platform.

Thanks to the tremendous amount of traffic Amazon.com gets these days, as well as the success of the Prime Video streaming platform, Amazon has become an advertising juggernaut. During the first quarter of 2025, it collected $13.9 billion in digital ad revenue.

What the future might hold

With a market capitalization of $2.3 trillion and trailing-12-month revenue of $650 billion, Amazon has grown into a colossal entity and delivered incredible gains to its long-term shareholders. But it would be unreasonable to expect it to do anything similar in the future — it’s already one of the five largest companies in the world. Growth can’t continue at a rapid pace indefinitely, and given Amazon’s current scale, there are limited opportunities for it to do things that could move the financial needle.

That doesn’t necessarily mean Amazon isn’t a worthy investment candidate, though. According to Wall Street consensus analyst estimates, its revenue is projected to increase at a compound annual rate of 9.5% between 2024 and 2027. That’s certainly an encouraging sign.

Even better, its bottom line is soaring thanks to cost cuts and operational efficiencies. Diluted earnings per share (on a split-adjusted basis) went from $3.21 in 2021 — and a $0.27 loss in 2022 — to $5.53 in 2024. Those impressive gains make the current valuation reasonable, in my view. As of June 19, the stock trades at a forward price-to-earnings ratio of 34.3.

Amazon won’t turn a $1,000 investment into $2.2 million over the next 28 years. However, this business should be on every long-term investor’s radar.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.