Investors are experiencing the first big stock market sell-off of 2025. I have no idea -- and neither does anyone else -- when this drawdown will end or when another one will occur. It is best to simply expect stock market corrections to happen from time to time rather than try to predict them, as the latter is virtually impossible.
What can investors do in reaction to stock market corrections? Embrace them. Take a good hard look at your watch list, figure out how much cash you have to deploy, and consider buying some shares that looked a lot more expensive a few weeks ago. Those same stocks might be much cheaper now.
Two safe stocks I am looking at right now are Airbnb (ABNB +0.16%) and Applied Materials (AMAT 3.26%). Here's why buying and holding these two technology players can set your portfolio up for success over the long haul.
NASDAQ: ABNB
Key Data Points
1. Airbnb: Lock on global travel demand
Airbnb took the world by storm with its innovative short-term rental and travel platform. It is now a major presence in the global travel market and is considered the third-largest online travel agency after competitor Booking Holdings.
Customers spent $81.8 billion on the Airbnb platform in 2024, up 12% year over year. It generated $2.6 billion in net income last year.
The stock is now in a 22% drawdown from recent highs despite posting strong earnings as investors worry about a consumer recession caused by the Trump administration tariffs and geopolitical conflicts. Recently, Delta Air Lines reduced its guidance for the first quarter, citing slowing consumer confidence and willingness to spend on travel compared to just a few months ago. This has people worried that Airbnb's growth will slow.
While this could occur, Airbnb is a robust platform that hundreds of millions of people have used. It has 5 million people hosting lodging services. If the travel industry goes through a slowdown, Airbnb's revenue growth will go down.
But over the long term, it is clear that people enjoy its model and will do so on the other side of any downturn. Generating revenue by taking a cut of every dollar that flows through its marketplace, Airbnb is protected from inflation as well. This makes the business model a take rate on global travel.
If you believe spending on travel will grow over the long term -- especially considering inflation -- then it is highly likely that Airbnb's revenue will grow as well.
Right now, Airbnb trades at a market cap of $78 billion. This is a price-to-earnings ratio (P/E) of 30 when compared to its 2024 net income, which doesn't look dirt cheap. Investors should remember, though, that Airbnb is reinvesting aggressively to expand its marketplace with new offerings set to come out this year.
At maturity, there is no reason Airbnb's margins can't reach the same level as Booking Holdings. Take this into account and Airbnb looks like a cheap stock to buy during this stock market drawdown.
AMAT PE Ratio data by YCharts
2. Applied Materials: Navigating the semiconductor landscape
The modern world runs on computer chips. Applied Materials is one of the pillars of this market, and yet few people outside of the industry have ever heard of the business. It builds and sells machines to semiconductor manufacturers that help them make advanced computer chips.
These machines give manufacturers the ability to analyze, modify, and shape semiconductor designs at the microscopic level, which is how a chip designer such as Nvidia can sell computer chips with transistors only 3 nanometers apart.
Without Applied Materials' machines and services, advanced computer chips used in artificial intelligence (AI) and cloud computing could not be built. With few competitors in this market, Applied Materials has grown along with the overall demand for semiconductor manufacturing. Revenue was $27.6 billion over the last 12 months and is up close to 200% in the last 10 years.
With the massive spending on computer chips relative to AI, Applied Materials should see even more growth in the years ahead. For decades, the world has used more and more advanced computer chips. I see no reason for this trend to stop anytime soon.
At this writing, you can buy Applied Materials stock at a P/E of just 19, which is well below the Nasdaq Composite and S&P 500 index averages. Despite this sharp correction, the S&P 500 still trades at an average P/E of 28, which is well above its historical average.
Applied Materials should maintain its dominant position in semiconductors for years to come, and create wealth for shareholders who hold on for the long term. This makes the stock an easy buy for your portfolio today.
