These growing companies are poised to deliver wealth-building returns for patient investors.
Buying and holding shares of quality growth stocks is the easiest and most efficient way for most people to build wealth. Focusing on the fundamentals that make a business great is far more important than how its stock performs in the near term.
With that said, here are two growing businesses that have seen their share prices soar this year. These companies have established themselves as leaders in their respective markets but still have a tremendous long-term opportunity ahead.
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1. Shopify
Shopify (SHOP 3.21%) is everywhere when you shop online. Millions of businesses worldwide use it for managing their online stores, payments, and shipping. Investors who bought the stock 10 years ago would be sitting on a massive gain of about 4,300%, but for new investors, Shopify stock is still an outstanding long-term compounding machine worth buying.
Investors can see the growth potential of this business by just looking at its recent performance. Despite its decade-plus operating history, Shopify is still growing revenue at over 30% year over year. Most of its revenue comes from payments, shipping, and other services, or merchant solutions, which means Shopify benefits as customers continue to grow their businesses.
There are roughly 5 million stores using Shopify, according to various estimates, but that’s just a tiny fraction of the number of businesses globally. The World Economic Forum estimates there are roughly 400 million small and medium-sized businesses worldwide. This is why Shopify can grow the value of your investment for decades.
The recurring revenue Shopify earns from subscriptions and services is boosting its profitability as the business expands. Shopify generated $1.8 billion in free cash flow over the last year, and this is providing more resources to invest in international expansion and artificial intelligence (AI).
Shopify Sidekick is a personal assistant for merchants that can analyze a store’s data and help the owner make better management decisions. AI tools like Sidekick can help merchants compete in a fast-changing competitive landscape, and as these businesses succeed, Shopify benefits.
While the stock has risen 53% year to date and trades at high multiples of sales and free cash flow, Shopify is nowhere close to capturing its long-term addressable market.
Image source: Getty Images.
2. Spotify Technology
Spotify Technology (SPOT -0.87%) is the leading music listening service with 696 million monthly active users and growing. The stock has surged over 700% since 2022 supported by strong financial results, but it’s just getting started. New opportunities emerging in AI could supercharge shareholder returns over the long term.
Spotify has been diversifying its offering across audiobooks and podcasts. It’s also bringing enhancements to its free ad-supported membership tier with good results. The company’s user base continues to grow at double-digit rates, up 11% year over year in Q2. But heading into 2026, management is focused on AI.
AI is improving recommendations and personalization, which should continue to drive strong growth for premium subscription tiers which are required to access certain features like AI DJ and AI playlists. This technology is also making it easier for Spotify to develop new features faster than ever.
Spotify’s competitive advantage is the amount of data it has on user preferences. Premium members can now chat with Spotify’s AI in the app, providing more granular data on what users like. This is creating a profitable flywheel, where smarter AI gets more accurate at knowing what users want to listen to. The outcome of this is higher member retention and more users signing up for premium subscriptions.
Most importantly, new features can now be created at lower costs because of AI’s ability to speed up testing and prototyping. This could drive significant margin expansion and growth in earnings and free cash flow that supports a higher share price.
AI should turn Spotify into a more profitable platform with more than a billion users in the next 20 years. Spotify’s operating profit surged 53% year over year in Q2, which is a sign of things to come. The opportunity in AI and its impact on the company’s growth should make the stock a very rewarding investment over the long term.
John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify and Spotify Technology. The Motley Fool has a disclosure policy.
