The U.S. equity market enjoyed impressive rallies in 2023 and 2024, fueled mainly by optimism around artificial intelligence (AI). However, 2025 is proving to be a different story as markets grapple with increasing economic uncertainty, rising geopolitical tensions, and an escalating trade war between the U.S. and China.
In one of the most aggressive moves yet, the Trump administration has imposed tariffs as high as 145% on most Chinese imports and up to 245% on certain Chinese products. China also retaliated with 125% tariffs on American imports, alongside placing export restrictions on critical heavy rare earth metals.
These tariff wars are disrupting supply chains across industries. Yet, a few high-quality companies, such as Microsoft (MSFT 0.43%), Amazon (AMZN 2.61%), and Oracle (ORCL 1.14%), seem positioned to withstand this storm in the long run. Here's why.
Microsoft
A decade ago, Microsoft focused mainly on selling costly software licenses and packages and generated lumpy sales. However, the company changed dramatically in the past years. Microsoft's business model evolved into a primarily subscription-based model, which means it earns recurring, high-margin, and predictable revenue streams. This transition positioned it as a resilient choice in the challenging market environment.
NASDAQ: MSFT
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Its core business segments -- Productivity and Business Processes segment, Intelligent Cloud segment, and More Personal Computing segment -- helped build a diversified business with steady cash flow. Key offerings include Microsoft 365, GitHub, LinkedIn, the Azure cloud computing platform, the Windows operating system, gaming, and devices like Xbox and Surface have been pivotal in ensuring high customer retention rates.
What really sets Microsoft apart in 2025, though, is its aggressive artificial intelligence (AI) strategy. Thanks to its strategic partnership with OpenAI, Microsoft successfully integrated advanced AI capabilities throughout its ecosystem, driving increased enterprise adoption. The company's AI-powered copilots are also help drive enterprise adoption across industries.
Wall Street expects Microsoft's revenue and earnings to grow annually by 11.9% and 12.3%, respectively, in the long run. Hence, the forward price-to-earnings (P/E) ratio of 29.5x --lower than its five-year average of 33x -- seems reasonable for a company with a solid moat and visibility.
Considering the company's robust business model and solid AI strategy, Microsoft seems a smart buy for the next decade.
Amazon
Although e-commerce is a significant part of Amazon's business, its ecosystem is much more than that. It encompasses the AWS cloud computing platform, digital advertising, and several AI-powered initiatives. Hence, although the escalating trade war, recession fears, and tariff uncertainties between the U.S. and China will disrupt supply chains for Amazon's e-commerce business, Amazon's long-term growth story is mostly intact.
NASDAQ: AMZN
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The AWS cloud computing business is undoubtedly Amazon's primary profit-generating engine. Although it accounted for 17% of the revenue mix in 2024, AWS contributed over 58% of the company's operating income. AWS reached an annualized revenue run rate of $115 billion in 2024 -- an impressive performance despite capacity constraints such as slower chip deliveries, disruptions from the new launch of the company's proprietary hardware and silicon, and a shortage of some essential components.
Amazon has also been moving at a breakneck speed on the AI front. The company invested $8 billion in Anthropic and launched a custom AI Trainium2 chip with 30% to 40% better price performance than traditional GPUs for AI workloads. The company is also working (either built or being built) on over 1,000 different generative AI applications. Meanwhile, increasing adoption of automation and robotics across business lines is expected to boost productivity while reducing costs.
Amazon's e-commerce business also expanded same-day delivery sites by 60% year over year in 2024 to cover more than 140 metro areas. By working on offering improved delivery speeds and convenience, more customers will prefer to buy from the company repeatedly. Amazon's advertising business is also making its presence felt and has doubled to a $69 billion annual run rate in just four years.
Amazon's share price has tanked by almost 29% from its all-time high in early February 2025. Subsequently, it is trading at a forward PE of about 31.3x --far lower than its five-year average of 55.4x.
The current share price dip seems an excellent opportunity for long-term investors to acquire a stake in this resilient company.
Oracle
Although Oracle is not currently included among the major AI stock picks, this situation may soon change. With the stock down nearly 35% from its 52-week high, it now looks like an attractive pick for long-term investors, especially considering its critical role in building global AI infrastructure and the robust growth momentum of its cloud services.
NYSE: ORCL
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Oracle's Remaining Performance Obligations (RPO), a metric highlighting the company's future revenue lock-in, is undoubtedly the most compelling reason to buy the stock. RPO soared 62% year over year to $130 billion in the third quarter of fiscal 2025 (ended Feb. 28, 2025) -- despite not including contracts from the $500 billion multicompany AI infrastructure initiative Project Stargate. Hence, when Project Stargate materializes, it will dramatically boost the company's already-high RPO.
Oracle's cloud infrastructure unit is also growing at breakneck speed -- 51% year over year, far outpacing several hyperscaler competitors. The company is strategically building AI training infrastructure by creating a massive 64,000 GPU deployment with Nvidia's chips. The company has developed the Oracle AI Data Platform, enabling its vast customer base to analyze data stored in Oracle's existing databases using AI models from several prominent providers. This capability lets customers derive insights from data while keeping it private and secure. Management expects this to be a significant competitive advantage while targeting the rapidly expanding AI inferencing market.
Thanks to several solid tailwinds, management is guiding for 15% revenue growth in fiscal 2026 and 20% in 2027. The company has also raised its quarterly dividend by 25%, highlighting its commitment to returning value to shareholders.
Despite the many tailwinds, Oracle trades at 19.1 times forward earnings, far lower than its five-year average multiple of 32.6x. Considering its robust cloud infrastructure, strategic AI initiatives, and broad geographical presence, the valuation seems cheap -- opening an opportunity to buy the stock now.
