The stock market has a long history of delivering wealth-building returns for investors, but the future is inherently uncertain, which is why you never want to put all your eggs in one basket. As long as you own a well-diversified portfolio of growing companies, you should see the value of your investments grow over time.
If your New Year's resolution is to save more, you can plant the seeds of a happy retirement by investing in the following stocks. Here's why Amazon(NASDAQ: AMZN), Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL), and Warren Buffett's Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) are excellent starter stocks for 2025.
1. Amazon
Amazon stock climbed 1,300% over the last decade and tacked on 45% in just the last year. It is dominating U.S. e-commerce with over 200 million Prime members, but the company also has solid positions in other high-growth markets like advertising and cloud computing, which should deliver more returns for shareholders over the next decade.
Amazon's bread-and-butter business is its online and physical stores, which generated $262 billion in revenue over the last year. It still has a tremendous long-term opportunity in a global e-commerce market valued at $4.1 trillion, according to Statista.
Other merchants are willing to buy sponsored ads to get their products in front of millions of Amazon shoppers. This is one of Amazon's fastest-growing revenue streams, bringing in $53 billion of ad service revenue over the last year.
Another monster opportunity for Amazon is its cloud services business. Revenue from Amazon Web Services grew 19% year over year on a constant currency basis in the third quarter. The emergence of artificial intelligence (AI) is incentivizing companies to accelerate their data migration to cloud services, which is a huge opportunity for this leading cloud services provider.
Amazon is able to take all these revenue streams and turn them into growing free cash flow. Amazon's trailing free cash flow grew 123% year over year to $47 billion, and with management continuing to optimize costs, it could see even more profitable growth that fuels the stock higher in 2025 and beyond.
2. Alphabet (Google)
Google is another online brand that many people are familiar with. Its parent company, Alphabet, says it has 2 billion users across all its products, which includes Gmail, Google Search, and Google Maps. Altogether, these products, including YouTube, are valuable assets that rake in billions in advertising revenue for the company.
Alphabet is a very profitable business, with free cash flow totaling $55 billion over the last year on $339 billion of revenue. The company's long-term growth prospects look solid as it launches new search features and advertising tools powered by its Gemini AI model.
AI is also fueling growth for Google Cloud, which ranks No. 3 in the cloud market behind Amazon and Microsoft. Revenue from cloud services grew 35% over the year-ago quarter -- faster than Amazon's 19%, indicating Google Cloud is gaining market share.
The cloud business is also starting to contribute to the company's bottom line, with the segment's operating profit improving to $1.9 billion in Q3, up from $266 million in the year-ago quarter.
Alphabet's massive user base and growth in the cloud market should make the stock a rewarding investment for years to come. The shares are very reasonably priced right now, trading at just 21 times 2025 earnings estimates.
3. Berkshire Hathaway
Amazon and Alphabet are great companies that can fuel handsome gains for years to come, but there's no business that's financially stronger than Warren Buffett's Berkshire Hathaway.
Buffett has spent the last five decades carefully piecing together an outstanding collection of businesses under one corporate umbrella. Berkshire owns dozens of businesses, including See's Candies, GEICO, and Burlington Northern Santa Fe, which altogether helped produce $37 billion in operating earnings in 2023.
Berkshire also holds large stakes in publicly traded companies, including Apple, Coca-Cola, and American Express, which Buffett bought years ago at attractive valuations. The company's equity portfolio totaled $271 billion in Q3, with another $320 billion sitting in cash and short-term investments in U.S. Treasury bills. If the stock market tanks, Buffett has ample resources to go after opportunities.
Buffett's knack for value investing has generated tremendous wealth for shareholders. From 1965 through 2023, Berkshire's share price returned an incredible 4,384,748%, which comes to about 20% on an annualized basis.
The big question is what happens to Berkshire after Buffett, who turned 94 in August. Berkshire will still be a solid investment due to the dozens of businesses it already owns. Greg Abel, who is currently overseeing all of Berkshire's non-insurance operations and is ready to be CEO tomorrow, as Buffett noted in his 2023 shareholder letter, will have the final say on investment decisions.
Berkshire is in good hands and should deliver wealth-building gains for shareholders for many years.
Don’t miss this second chance at a potentially lucrative opportunity
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. American Express is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, and Microsoft. 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.
