When you're on an airplane, the pilot or a flight attendant will typically announce over the loudspeaker to "buckle your seatbelt" when the air is turbulent. That could be good advice for investors right now, too.
The Nasdaq Composite Index (^IXIC 0.37%) is now squarely in correction territory. But stock market corrections have one key redeeming quality: They provide excellent opportunities to buy great stocks at a discount. Here are my picks for the two smartest stocks to buy during the current Nasdaq correction and hold forever.
A great stock from A to Z
Amazon (AMZN 1.19%) stock has been hit especially hard in the latest market sell-off. Shares of the e-commerce and cloud services giant are down almost 20%. Should investors bail on Amazon? Not at all. I think it's time to back up the truck and load up on the stock.
NASDAQ: AMZN
Key Data Points
Sure, Amazon's e-commerce business could be negatively impacted by the Trump administration's steep tariffs. However, I suspect any effects will only be temporary -- even if the tariffs remain in place longer than many expect they will. I wouldn't be surprised if Amazon Haul, the company's new offering for products that cost $20 or less, could benefit from tariffs.
More importantly, Amazon's biggest growth driver these days is its cloud business. As a case in point, Amazon Web Services (AWS) revenue jumped 19% year over year in the fourth quarter of 2024 compared to revenue growth of 10% for its North America segment and 8% for its international segment.
Artificial intelligence (AI), especially generative AI, should continue to serve as a huge tailwind for AWS regardless of how the stock market performs. Amazon CEO Andy Jassy put the opportunity for AWS in perspective in the company's Q4 earnings call, stating:
[W]hile it may be hard for some to fathom a world where virtually every app has generative AI infused in it, with inference being a core building block just like compute, storage, and database, and most companies having their own agents that accomplish various tasks and interact with one another, this is the world we're thinking about all the time. And we continue to believe that this world will mostly be built on top of the cloud with the largest portion of it on AWS.
I don't think that's merely spin from a corporate executive. Jassy's prediction is spot on, in my view. No, Amazon won't be the only winner from the continued adoption of generative AI. However, I expect it to be one of the biggest beneficiaries.
One area to particularly keep your eyes on is AI-powered software development. Amazon Q has already helped save the company $260 million and 4,500 developer years in migrating applications to new versions of Java. I look for Amazon Q's capabilities to increase dramatically over the near term and for many customers to pay to harness the power of this game-changing technology.
A way to zig when the market is zagging
Somebody forgot to tell Vertex Pharmaceuticals (VRTX 0.15%) that most stocks fall when the market sinks. Shares of the biotech innovator are up 24% year to date while the Nasdaq has plunged. That's not surprising to me, though.
NASDAQ: VRTX
Key Data Points
I've always seen Vertex as a great stock to own during times of uncertainty. The company sells the only approved therapies that treat the underlying cause of cystic fibrosis (CF). Physicians won't stop prescribing these drugs and patients won't stop taking them because the stock market is falling or the economy is struggling.
Vertex appears to be poised for accelerated growth. It recently won two key U.S. Food and Drug Administration (FDA) approvals, one for CF therapy Alyftrek and another for acute pain drug Journavx (suzetregine). Alyftrek is Vertex's most powerful and convenient CF therapy so far. Journavx should have huge commercial potential as a non-opioid painkiller.
Meanwhile, Casgevy should also pick up momentum in treating sickle cell disease and transfusion-dependent beta-thalassemia. This gene-editing therapy (the first CRISPR therapy approved by the FDA, by the way) is a one-and-done treatment that effectively cures these two rare blood disorders.
Vertex's pipeline features four late-stage programs. The biotech company is targeting another indication for suzetrigine in treating painful diabetic peripheral neuropathy. It has two promising candidates targeting kidney diseases -- inaxaplin for APOL1-mediated kidney disease and povetacicept for IgA nephropathy. Last, but not least, Vertex could have a cure for severe type 1 diabetes waiting in the wings with islet cell therapy zimislecel.
If you're looking for a way to zig while the market is zagging, I think Vertex is a great stock to buy and hold.
