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Investors understandably tie today's technology industry to artificial intelligence (AI). Since cutting-edge technology has driven much of the innovation, investors could easily fall into the trap of assuming that all tech companies are AI enterprises as well.
Nonetheless, in many tech enterprises, AI is more of a secondary growth driver. Given that, tech stocks like Amazon (NASDAQ: AMZN) and Sea Limited (NYSE: SE) should continue to drive long-term growth, even though only one is an AI company.
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Most of the public knows Amazon best for its e-commerce platform. This is crucial because no matter where one stands on the state of the market, the e-commerce part of the business is highly recession-resistant due to the wide variety of goods it offers.
However, even with faster-growth businesses like digital advertising and third-party seller services, its retail business is generally a slower-growth, lower-margin segment.
Instead, most of its growth comes from its AI-driven cloud arm, Amazon Web Services (AWS). Despite accounting for just 21% of the company's revenue in the first half of 2026, it delivers the majority of the company's operating income.
With that, Amazon reported $382 billion in net sales in the first two quarters of 2026, an 18% increase from the same period in 2025.
Admittedly, its net income points to struggles. Even though it reported $92 billion in profit in the first half of 2026, $69 billion came from investment gains. Thus, when subtracting those increases, Amazon's net income barely grew over the same period.
Other income also skewed its P/E ratio down to 21, an unusually low level for Amazon. Furthermore, after decades of reporting massive free cash flows, it reported a $7.6 billion outflow over the trailing 12 months. With the company pledging $220 billion in capital expenditures (capex), the cost of keeping up in the AI race has strained its balance sheet.
Nonetheless, its 31 forward P/E ratio suggests its valuation is well below historical levels. Additionally, the spending that has strained the balance sheet and income statement is an investment that should make the upside worth the risk. Thus, it likely pays to be patient with Amazon stock.
In one respect, Sea Limited is the non-AI version of Amazon, with a leading e-commerce business, Shopee.
It differs from Amazon in that it operates a fintech enterprise, Monee, which continues to gain traction in its home region of Southeast Asia. Also, the company started as a gaming company, Garena, which survives today and is best known for the popular mobile game Free Fire. All three businesses are recession-resistant, which could mitigate stock selling in tougher times.
Fortunately, that does not appear to be a problem at the moment. In the first half of 2026, revenue increased 47% year over year to $14.9 billion, with all three segments growing in the double digits.
Its net income of $896 million grew by a more modest 9% annually, as the company increased operating expenses to invest in its business. Although the lower profit may disappoint investors now, those investments could drive revenue and profit growth later.
Moreover, since it is not an AI company, it only spent about $793 million in capex over the trailing 12 months, and the $4.9 billion in free cash flow over the same period suggests it can afford such investments.
Indeed, the investments probably led to significant declines in the stock over the last year. Still, even with slower profit growth, the stock trades at just 37 times earnings. Additionally, with a forward P/E ratio of 25 and its efforts to invest for the future, Sea Limited is arguably a stock investors should consider buying.
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Will Healy has positions in Sea Limited. The Motley Fool has positions in and recommends Amazon and Sea Limited. The Motley Fool has a disclosure policy.
2 Tech Stocks to Buy Now and Hold for a Decade (Hint: 1 Isn't in the AI Trade) was originally published by The Motley Fool
