Prediction: These two standout S&P 500 growth stocks will dominate the market over the next five years.

that S&P 500 The index includes approximately 500 large-cap U.S. stocks and is often used as a key benchmark for measuring broader stock market performance. Over the past five years, the benchmark index has achieved a total return of 109%. Over the past 10 years, it has returned a total of 257%.

Investing in an exchange-traded fund (ETF) that tracks the S&P 500 index is a great, low-risk investment move, but there are also stocks that are part of the index that generate returns that beat the index average. With that in mind, read why two Motley Fool contributors think buying S&P 500 growth stocks and holding on to them for the next five years is a good move.

The tech giant still has room to run.

Keith Noonan: Up about 22% this year Amazon (AMZN 0.78%) The stock underperformed the S&P 500 Index’s total return of 23%. But there are good reasons to think that big tech companies will significantly outperform their benchmark indices over the next 50 years.

First of all, Amazon’s business continues to look quite strong. As of this writing, the stock is not outperforming the S&P 500 in 2024 trading, but the company is generally showing encouraging results.

Amazon’s second quarter sales increased 10% year-on-year to $148 billion, and operating profit more than doubled compared to the same period last year to $14.7 billion. Revenue from the company’s Amazon Web Services (AWS) cloud infrastructure business increased 19% year-over-year to $26.3 billion. Meanwhile, the company’s digital advertising business grew about 20% year-over-year to about $9.5 billion. Sales in the e-commerce-focused North American segment increased 9% to $90 billion, while sales in the similarly structured International segment increased 7% to $31.7 billion.

Growth in its higher-margin AWS and digital advertising divisions, as well as improved margins in e-commerce, have helped Amazon deliver strong profit growth this year. The e-commerce business still accounts for the majority of Amazon’s overall revenue, but cloud services and digital advertising will likely continue to make up a larger portion of overall revenue. Increased revenue contribution from these high-margin businesses will help boost the company’s combined margins.

But when evaluating the return potential of Amazon stock over the next five years, it would be a mistake to underestimate its relatively slow-growing, low-margin e-commerce business. The potential for artificial intelligence (AI) to become a sales driver for AWS is already reflected in many forecasts, but the potential for AI to have a transformative impact on the company’s online retail business still appears to be underestimated.

Some of the untapped revenue potential of the tech giant’s massive e-commerce imprint may soon begin to be unlocked as AI and robotics lay the foundation for increased automation of the company’s warehouse and shipping operations. If these unfolding technology trends begin to meaningfully lower the operating costs of online retail businesses, Amazon stock is poised to soar.

This retail leader can continue to dominate the market.

Jennifer Cybill: home depot (HD -0.94%) It’s been a stock that’s been pounding the market for almost forever. Over the past 10 years, it has returned nearly twice the return of the S&P 500, and the gap gets wider the further back you go. Over the past 15 years, it has more than tripled the overall market revenue.

If you needed proof of this company’s strength, it’s that it’s still outperformed the market over the past year despite major challenges. These challenges are external and the market recognizes them and how well Home Depot is rising to the occasion.

^SPX data from YCharts

The property market is under severe pressure from high mortgage rates, and shoppers generally are avoiding big, expensive items due to inflation. Home Depot reported a slight increase in sales in its fiscal second quarter (ending July 28) due to recent acquisitions and new stores, but comparable sales fell 3.3%. Average tickets were down 2.2%, but big-ticket items (over $1,000) were down 5.8%, and larger products like kitchen remodels had “lesser engagement.”

As interest rates begin to fall, the tide may begin to turn. Home Depot is the world’s largest home improvement chain, with more than 2,300 stores and a strong digital channel. Despite the decline in comparable sales, the company is still incredibly profitable and generating growth wherever possible. The omnichannel component has become an important part of the business, with digital sales up 4% in the second quarter compared to the same period last year, with half of orders placed in stores.

We’re pulling several growth levers. We plan to open 12 stores in fiscal 2024 and are investing in acquisitions and service improvements, especially for our professional segment. As soon as the industry grows, it’s well-positioned to grow again, and there’s good reason to believe it can continue to dominate the market for the next five years or more.