The stock market has taken a nose dive due to fears that a looming trade war will take a toll on the U.S. economy. While the recent declines have hit nearly every sector, no group of stocks has fared worse than the big tech leaders that have been benefiting from the rise of artificial intelligence (AI). Some of these stocks are down by around 20%. But those slides make them interesting investments to consider buying.
The five stocks that I'm most focused on right now are Nvidia (NVDA 1.58%), Taiwan Semiconductor Manufacturing (TSM +0.42%), Alphabet (GOOG 0.58%) (GOOGL 0.42%), Meta Platforms (META 3.77%), and Amazon (AMZN 0.87%). I think their dips have created great buying opportunities, as I'm focused on the next five years, not the next five days, weeks, or months.
Focus on the long term, not the short term
Investors need a reality check on this potential trade war. While President Donald Trump has enacted some tariffs against Mexico, Canada, and China (and postponed, for now, others that he had threatened to impose), there are likely still more on the way, as he has announced plans for additional retaliatory tariffs to take effect on April 2. This has led many to fear what these added costs for goods could do to the economy. Consumers may choose to buy less if tariffs push prices significantly higher.
While this is a legitimate fear for the short term, I see it as unlikely that this trade war will persist for years. So I'm ignoring the question of what impact a trade war could have on these five companies and considering what their trajectories could look like over a longer time horizon. I can't predict what will happen in the short term, but I can recognize long-term trends (like the AI infrastructure build-out) that will help them.
All of these stocks are now significantly down from the all-time highs they hit earlier this year.
The long-term trends for all five of these companies are quite bullish, and this sell-off looks like a prime opportunity to buy more shares.
AI will have a larger effect in five years than the trade war
Nvidia's graphics processing units (GPUs) provide much of the computing muscle that underpins the AI infrastructure build-out. Demand for its GPUs has been insatiable, and late in February, management projected 65% year-over-year revenue growth for the current quarter (its fiscal 2026 Q1) -- even knowing that a trade war may be starting. The AI megatrend is still in its early days, and Nvidia will remain one of its primary benefactors. I expect it to be a long-term winner, and in that context, this recent sell-off is a gift to investors.
NASDAQ: NVDA
Key Data Points
The next hardest-hit stock was Taiwan Semiconductor, though the company has sidestepped tariffs. It recently announced plans to spend an additional $100 billion on building more chip fabrication facilities in the U.S. (on top of the $65 billion U.S. investment plan it announced a few years ago), a pretty clear peace offering to Trump. While the stock moved higher on the news, it's still well off its highs. Meanwhile, management says it expects revenue to grow at around a 20% compound annual rate over the next five years, so this stock is as no-brainer of a buy as it gets right now.
Alphabet is also well off of its highs, but some of the fear around its outlook may be warranted. Alphabet gets the majority of its revenue from advertising, and whenever the U.S. economy tanks, advertising budgets are among the first places that companies cut. However, a trade war could also just shuffle the sources of advertising spending around. Tariffs generally act to promote purchases of domestically produced goods while discouraging purchases of imported ones. So, the marketers of domestic products may advertise them more widely while ads for foreign products diminish. Either way, Alphabet's business will be fine over the long term, although it may experience some short-term headwinds.
NASDAQ: GOOGL
Key Data Points
Because Amazon makes so much money from e-commerce sales, a weak U.S. economy is not in its best interest. However, in 2024, 58% of its operating profits came from its cloud computing division, Amazon Web Services (AWS). AWS is unlikely to experience a slowdown, as more companies are migrating workloads to the cloud and new data centers are being set up to support AI. As a result, Amazon should be fine over the long term, thanks to its diversified income streams.
Finally, Meta Platforms is down by the least of all these companies. It derives nearly all of its revenue from ads, so the same concerns apply to it as apply to Alphabet. However, the same bullish caveat also prevails: This trade war will likely be a short-term event, and five years from now, Meta will still be a dominant social media company. However, Meta will also have a significant AI toolbox five years from now to help it sell and deliver its ads, which will undoubtedly boost its revenue.
While the reasons to fear the economic impacts of a trade war are real, I find it hard to imagine a scenario in which these international disputes will last a long time. With that in mind, I'd suggest investors take the long-term view and buy the dip on some of these hard-hit tech stocks.
