2 Growth Stocks With Sky-High Potential to Hold for Decades

Intuitive Surgical's procedure-led, recurring-revenue model keeps strengthening as da Vinci 5 rolls out.
Amazon's multiple profit engines — AWS, retail, and advertising — continue to scale together.
Both businesses are investing aggressively today to unlock years of compounding ahead.
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Investors searching for long-duration compounders don't need to overcomplicate things. One approach is to look for market-leading, platform-like business models with recurring economics and management teams investing for the next era of growth. Two standouts fit that bill today: minimally invasive robotic surgery specialist Intuitive Surgical (NASDAQ: ISRG) and cloud-computing and online retailer juggernaut Amazon.com (NASDAQ: AMZN).

Intuitive's latest quarterly update reinforced the strength of its model, while Amazon's second‑quarter numbers highlighted a business that keeps scaling across multiple profit engines. Neither is cheap, but the durability of their growth stories makes them worthy buy‑and‑hold candidates for decades. And if you're looking for something you can hold onto for the long haul, quality (which rarely trades at cheap valuations) is arguably more important than your entry points anyway.

Image source: Getty Images.

Intuitive posted a strong Q2, with revenue up 21% year over year to $2.44 billion and non‑GAAP diluted earnings per share (EPS) of $2.19 — up 23%. Growth was broad-based across its different key sales drivers — instruments, accessories, and systems placements. This momentum reflects rising procedure volume and continued adoption of the company's latest minimally invasive surgical platform: the da Vinci 5.

The lifeblood of Intuitive Surgical‘s business has always been procedure growth — a key performance indicator that is looking outstanding lately. Management now expects worldwide da Vinci procedure expansion of about 15.5% to 17% for 2025, essentially tracking last year's robust pace. Importantly, Intuitive placed 395 da Vinci systems in Q2, including 180 da Vinci 5 units, expanding the installed base that fuels high‑margin recurring revenue on instruments and accessories. That mix supports a compounding engine that is difficult for rivals to disrupt.

Profitability is holding up even as the company rolls out new platforms and navigates tariff headwinds. Intuitive guided to a 2025 non-GAAP gross margin of 66% to 67% (a figure that management says includes the estimated impact of tariffs) and continues to generate substantial cash, giving it ample flexibility to invest, expand indications, and support customers through usage-based models. The outcome is a virtuous cycle: A larger installed base begets more procedures, which funds more innovation, which then drives more placements — and so on.

Amazon's Q2 results underscored the advantage of owning multiple engines that reinforce each other over time. Net sales rose 13% year over year to $167.7 billion; operating income climbed to $19.2 billion; and each of the company's major segments contributed. Its online stores segment saw 11% year-over-year growth. Other revenue (this is primarily driven by Amazon's advertising business) grew 19% year over year. Additionally, Amazon's high-margin, cloud-computing business, Amazon Web Services (AWS) saw sales rise 17% year over year. These pieces work together, with Prime membership demand and an ever‑denser logistics network supporting retail economics, while AWS and advertising benefit from growing scale and provide higher‑margin revenue streams.

AWS, of course, remains the company's crown jewel. Segment revenue increased 17.5% year over year to $30.9 billion, with the high-margin segment's operating profit helping to power companywide earnings even as Amazon steps up capital spending to support artificial intelligence (AI) workloads.

Advertising is another quiet but powerful engine, rising at a healthy clip and benefiting from closed-loop performance data only Amazon can provide at this scale. The combination of AWS, ads, and a more efficient retail network give Amazon multiple ways to grow EPS over a very long horizon. Yes, capital expenditures are heavy as the company builds data centers and invests for the AI era (Amazon spent $31.4 billion on capex during Q2 alone). The question, however, isn't the spending itself; it's whether the returns justify it. Fortunately, Amazon has a long track record of front-loading investment to capture decades of utility, and the current cycle looks similar. With multiple profit centers throwing off cash, Amazon can fund growth internally while still improving margins over time.

Both companies have built enviable, self-funding, platform-like business models, creating virtuous flywheels for themselves that seem to constantly expand their competitive advantages over peers. Intuitive's installed base and recurring procedure economics should compound for years as robotics penetrates more procedures and geographies. Amazon's diversified engines — retail, advertising, and AWS — reinforce one another, creating operating leverage as scale increases. Sure, with Intuitive Surgical and Amazon's price-to-earnings ratios sitting at 65 and 34, respectively, these growth stocks are not cheap — and that does bring some risk to the table, making it important for investors to keep their allocations to these stocks small. But these two companies' potent combinations of durable competitive advantages, recurring revenue characteristics, and large addressable markets make them both compelling candidates to buy and hold for decades.

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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Intuitive Surgical. The Motley Fool has a disclosure policy.

2 Growth Stocks With Sky-High Potential to Hold for Decades was originally published by The Motley Fool