If the choppiness in the markets has you concerned, there's one thing you can focus on that will help calm any uneasiness: the long term. By shifting your focus from what will happen during the next few weeks to what will happen over the next few years, you can ignore the short-term noise driving the markets.
At the end of the day, you need to ask yourself: "Will this matter in three to five years?" While the knee-jerk reaction may be, "yes," think about what was going on five years ago: COVID-19. Many people were convinced that we would never return to in-person work, but that turned out to be a mostly false prediction.
However, many of the strong tech companies continued their dominance amid difficult circumstances and grew stronger despite significant headwinds. I think the market is in a similar situation today, and investors should consider scooping up these three beaten-down tech stocks that will likely be stronger five years from now.
My picks for stocks that will be just fine three to five years from now are Amazon (AMZN 0.28%), Meta Platforms (META 0.17%), and The Trade Desk (TTD 4.92%). All three are experiencing some short-term headwinds with tariffs and economic uncertainty, but that likely won't matter a few years from now.
Amazon
Amazon is one that many have keyed in on, and it could be wrecked by tariffs. It doesn't take much searching on Amazon's website to find that a considerable number of its products are made in China. Although the exact tariff figure on Chinese goods is rapidly changing, it's incredibly high. This could eat into Amazon's profits, which wouldn't bode well for the stock.
However, investors need to focus on the facts. If we enter a prolonged trade war with China, suppliers will move supply chains elsewhere, which will likely be resolved within three to five years. Also, Amazon doesn't generate a ton of profits from the goods it sells.
NASDAQ: AMZN
Key Data Points
Retailers don't make a lot of money from their products; they make their profits on volume. Take Walmart, for example. Over the past year, it sold $681 billion in goods but only made a $19.4 billion profit -- a 2.9% margin.
In comparison, Amazon's profit margin was 9.3% over the past year. So, does this mean Amazon makes more from its commerce segment? Absolutely not.
Instead, Amazon gets a boost from other inherently high-margin divisions within its company. Subscription services, ad services, and Amazon Web Services (AWS, its cloud computing division) all have much higher margins to drive Amazon's profits. For reference, AWS made up only 17% of Amazon's revenue in 2024, yet produced 58% of its operating profits. These divisions won't be affected much by an economic downturn and will continue pushing Amazon's stock higher over the next few years.
Meta Platforms
Meta Platforms is better known by its former name, Facebook. Meta is the parent company of social media sites Facebook, Instagram, Threads, WhatsApp, and Messenger. These apps make money through advertisements, which is a huge cash cow for Meta.
Ad budgets are usually cut during an economic downturn, which could harm Meta's business. We saw this briefly during COVID-19 and in late 2022 and 2023, when most of the market was convinced we were headed for a recession.
META Operating Revenue (Quarterly YoY Growth) data by YCharts
However, Meta's revenue always bounces back stronger than ever following these brief dips. I believe we'll see something similar throughout 2025, but its five-year revenue will likely be much higher, which will also drive the stock price up. So the sale price you're getting today on Meta's stock is a great bargain.
The Trade Desk
Similar to Meta, The Trade Desk operates in the ad environment but it acts as an intermediary between ad buyers and sellers to ensure that buyers place their content in the best locations.
While The Trade Desk could see a revenue dip similar to Meta, it has an even bigger problem: platform migration. During the fourth quarter, The Trade Desk migrated its users from its old Solimar platform to Kokai, which had some execution issues. This caused The Trade Desk to miss revenue guidance for the first time in company history, which caused the stock to sell off heavily.
NASDAQ: TTD
Key Data Points
However, this issue won't be present five years down the road. What will be even more prevalent is programmatic advertising, which uses artificial intelligence to process how an ad campaign is performing and tweak as necessary to provide peak performance. The Trade Desk is a market leader in this area, and I'm confident that it will be just as dominant five years from now as it is today.
While the road may be a bit bumpy between now and five years from now, I'm confident that The Trade Desk's stock will be much higher, prompting me to add more shares to my position.
