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Nvidia transformed itself with its CUDA software platform while creating a wide moat at the same time.
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Amazon and Apple’s moats are built around customer loyalty.
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The abilities of Microsoft and Alphabet to adapt often have been under-appreciated by the market.
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10 stocks we like better than Nvidia ›
If you want to buy tech stocks that you can comfortably hold for the next two decades, you need to find companies with wide moats and the ability to adapt.
Let’s look at five tech leaders who have precisely those attributes.
Nvidia (NASDAQ: NVDA) started out as a chipmaker supporting the video game industry: Its graphics processing units (GPUs) were designed to speed up graphics rendering in video games. However, it also created its CUDA software platform, which allows developers to program its chips for specific tasks, and cleverly gave it away free to universities and research labs — including the places where early work on artificial intelligence (AI) was taking place.
That decision changed the company completely. In part due to the fact that developers are comfortable working with CUDA — which is only compatible with Nvidia chips — and in part due to the fact that it has long designed the top-performing GPUs, its parallel processors are well established as the foundation of the AI infrastructure being used to train and run the most complex models. Meanwhile, because so much of the initial AI code was created using CUDA, it’s hard for developers to leave Nvidia’s ecosystem.
Moreover, the company has continued to evolve and widen its moat, first through networking, and now with its investment in OpenAI.
Nvidia’s strength is not just that it has the best chips, but that it has consistently identified new opportunities before others have and adapted to take advantage of them.
Image source: Getty Images.
For many years, Alphabet’s (NASDAQ: GOOGL) (NASDAQ: GOOG) Google search engine looked largely unchanged on the surface, but behind the scenes, the company has been constantly evolving the software, figuring out how to deliver better results and finding new ways to monetize them. It has also successfully navigated shifts in the space — for example, the majority of search moving from desktop to mobile. Now, it’s doing the same thing with AI, where its innovation is more noticeable thanks to AI Overviews and AI Mode.
The company gave itself a wide moat by becoming the gateway to the internet, and it has maintained it thanks in part to the huge distribution advantages it has via its Chrome browser and Android operating system. Its search revenue-sharing deal with Apple (NASDAQ: AAPL) only adds to this, and the reach of its ad network is unparalleled.
Alphabet also branched out into cloud computing, and built YouTube into a massive global platform. Looking ahead to markets that barely exist now, it has made big bets on robotaxis and quantum computing. This is a company with wide moats, and it continues to innovate and adapt.
Amazon (NASDAQ: AMZN) probably doesn’t get enough credit nowadays for either its moat or its adaptability. It went from being an online bookstore to the largest e-commerce player in the world by aggressively building out a huge fulfillment and logistics network. The unmatched diversity of its product offerings and its ability to quickly get goods to its customers have provided it with a wide moat. Today, it continues to expand on that behind the scenes through its use of AI and robotics.
It also gave birth to the cloud computing industry with its launch of Amazon Web Services (AWS). AWS is now one of the most profitable cloud businesses anywhere, and its high switching costs keep its enterprise customers locked in. And it developed its own tensor processing chips, which give it a cost and performance advantage in offering AI processing power to its customers.
Amazon has shown over and over again that it’s not afraid to rethink how it operates, whether that means automating warehouses or pushing into digital advertising, and that ability to keep evolving is why it stays ahead.
Apple’s moat is rooted in the loyalty of its customers and the way its devices and services work seamlessly together. Once someone gets enmeshed in the Apple ecosystem, moving away from it is a hassle, which keeps people buying its products even at premium prices.
What’s often overlooked is how much Apple has changed over the years, from being mainly a computer maker to dominating the mobile device market with the iPhone, and then building a high-margin services business. More recently, it, too, made the leap into designing some of its own chips, which gave it more control over performance and the user experience. Apple has proven it knows how to evolve without losing the loyalty that keeps its moat so strong.
Microsoft‘s (NASDAQ: MSFT) moat comes from how deeply its software is embedded in the daily processes of businesses around the world. Its Windows operating system and the Office suite of productivity titles that now come bundled into Microsoft 365 both have high switching costs that make it tough for companies to shift to rival options.
However, Microsoft does not get nearly enough credit for how it has been able to adapt over the years. It shifted from a boxed-software company to a software-as-a-service (SaaS) company with Microsoft 365, and has also become a cloud computing leader with Azure. It also became one of the first large tech companies to fully embrace AI, investing in and partnering with OpenAI, and incorporating AI models throughout its different segments. That has been a big growth driver for the company in recent years.
Microsoft’s combination of entrenched software and its willingness to adapt is what makes it a stock you could happily own for the next two decades.
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Geoffrey Seiler has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, 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.
5 Monster Stocks to Hold for the Next 20 Years was originally published by The Motley Fool
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