The marketwide sell-off has affected many stocks, but none more than tech stocks. Tech is one of the first places to get hit during a market sell-off, as it often trades at high valuations and has a lot of growth baked into it. Nvidia (NVDA 2.94%), Taiwan Semiconductor Manufacturing (TSM 4.37%), and ASML Holding (ASML 5.43%) have been sold off aggressively, slipping around 25%, 30%, and 40%, respectively.
While some shareholders may see this as a time to panic, I think it's an excellent time to scoop up these stocks, as the price declines are mostly centered around fear, not facts.
Investors are starting to see a lot more tariff relief
Many investors fear that President Donald Trump's tariff plan will harm companies that source their goods outside the U.S. To offset the tariffs, the price of goods will rise, which means the consumer won't be able to purchase as much, harming pretty much every company.
That's the idea, but President Trump's team has already made several concessions over the past month. They have backed down from reciprocal tariffs (except for China), so now it's only a 10% rate across the board. However, many countries are negotiating with President Trump's team, and if a deal is struck, tariffs may be further reduced from the 10% level. Additionally, we're starting to see more carve-outs for specific products.
NASDAQ: NVDA
Key Data Points
The White House exempted items like copper, pharmaceuticals, and semiconductors, and subsequently exempted smartphones, computers, and other electronic devices from the reciprocal tariffs targeted at China.
So, the worst-case scenario that investors imagined following the Liberation Day tariff announcement isn't happening, yet these stocks remain well off their all-time highs established earlier this year. In addition to tariffs likely not being as bad as feared, these three are all massive beneficiaries of the artificial intelligence (AI) buildout.
AI is still a massive driver for this trio
AI has taken a backseat to tariff fears, but that trend is still occurring. The AI hyperscalers continue to build out massive computing power, as it's becoming clear that more computing power is necessary to continue innovating and improving current AI models.
Nvidia's CEO, Jensen Huang, noted that an estimated $400 billion was spent on data center buildouts during 2024. However, that figure is expected to rise to $1 trillion by 2028. That's huge news for Nvidia, which generated around $131 billion in revenue over the past 12 months. If it can keep its market share, it will continue putting up massive growth figures over the next few years.
While it's easy to dismiss Nvidia's growth predictions because it benefits the most, an even more reliable source is Taiwan Semiconductor. Taiwan Semi is the leading contract chip fabricator, producing chips for those who cannot fabricate them themselves, which is nearly all modern tech companies like Nvidia and Apple (AAPL 0.96%). Chip orders are placed years in advance, giving Taiwan Semi's management an unprecedented view into the future of the chip industry.
NYSE: TSM
Key Data Points
They project that AI-related revenue will grow at a 45% compound annual rate over the next five years and that overall growth will be nearly 20%. That's massive chip growth, and it confirms the data center buildout growth that Nvidia mentioned.
If the demand for chips grows that much, TSMC is going to need machines to fabricate chips. ASML is the only company on Earth that makes extreme ultra-violet (EUV) lithography machines used to lay the tiny electrical traces on chips. With ASML's technology, the chips that we enjoy today wouldn't be possible.
There is no competition for ASML, which gives it a technological monopoly in this space. This indicates ASML should see strong growth over the next few years, and it's time to take advantage of the sale price the market is providing.
NVDA PE Ratio (Forward) data by YCharts
Following the market sell-off, this trio is far cheaper than they once were. This should give investors the green light to begin scooping up shares, as this trio has massive growth ahead of it. Yet the stocks are trading for a much lower valuation than they were just a few months ago. If you've got some cash to deploy in the market, I can think of few better stocks to buy than these three.
