Tariff mania has taken all the oxygen out of the room in geopolitics, economics, and especially on Wall Street. For good reason, too. The fees importers must pay on goods coming into the United States from countries such as China could have a wild impact on the United States economy, reverberating around the globe. Stocks have reacted to these uncertain tariff shocks, posting huge up and down days with weeks of major volatility.
Volatility can be the friend of the long-term investor. Here are two beaten-down technology stocks off around 25% from highs that investors should buy today despite the tariff disruption to our economy.
1. TSMC: Dominant position in computer chips
Computer chips and semiconductors are a great place to look to avoid the tariff mayhem, as the category is exempt from tariffs. Good thing for Taiwan Semiconductor Manufacturing (TSM +5.55%) as the company imports a ton of computer chips into the United States. Otherwise known as TSMC, it is the largest semiconductor foundry in the world, which is a manufacturer that builds and assembles computer chips for third parties such as Nvidia, one of TSMC's most important customers.
NYSE: TSM
Key Data Points
TSMC has benefited greatly from the growth of the artificial intelligence (AI) data center market. Its specialty is advanced semiconductors for high-performance computing (HPC), which now makes up 59% of its overall revenue. Data center builders for the AI sector plan to spend hundreds of billions of dollars on capital expenditures just in 2025, with more to come for the rest of the decade. This will continue to be a boon to TSMC's top-line growth regardless of how the tariff confusion shakes out.
The company is now taking geographical diversification seriously, seeing as most of its factories are located in Taiwan. Earlier this year, it announced plans to spend $100 billion more in the United States to build three new fabrication facilities. All signs point to more growth for the dominant player in computer chip manufacturing.
In a 27% drawdown, TSMC stock now trades at a trailing price-to-earnings ratio (P/E) of 21. For a company growing revenue 35% year over year and with plenty of tailwinds left at its back, this looks like a cheap price for investors focused on the long haul. Avoid the tariff mayhem and scoop up some shares of TSMC for your portfolio.
Data by YCharts.
2. Alphabet's AI crossroads
One of the largest drivers of demand for TSMC is cloud computing infrastructure spending from companies such as Alphabet (GOOG +3.42%) (GOOGL +3.77%). The technology giant buys Nvidia chips and has TSMC produce its own computer chips for its AI tools.
Alphabet is in an interesting place right now in regard to AI. Last quarter -- the first quarter of 2025 -- its numbers looked rock-solid yet again. Google Search revenue was up 10% year over year, YouTube advertising revenue grew 10% year over year, and Google Cloud revenue grew at a rapid 28% clip year over year. Plus, subscription and platform revenue grew 23% year over year, which includes revenue from its new AI tools.
Nobody can say that Alphabet's business is struggling right now. However, it is clearly facing a changing landscape when it comes to search engines with AI upstarts like OpenAI. ChatGPT has hundreds of millions of users and is growing rapidly. Alphabet has deployed competitive tools such as Gemini to try to catch up, but it is still behind the pack when it comes to conversational AI at the moment.
This fast growth from OpenAI has Alphabet stock down 23% from its highs despite these stellar financial results. Its P/E ratio is now under 18. Despite these competitive risks, I think Alphabet is well-positioned to win in AI due to its infrastructure advantage with Google Cloud and the existing billions of users on Google, its associated services, and YouTube. Alphabet can deploy AI functionality to these existing products to compete with OpenAI's ChatGPT.
Even if it loses its monopoly status in search engines, a new competitor in OpenAI has not destroyed and will likely not destroy Alphabet's profitability in the future. With the stock down on AI competition fears, now looks like a great time to buy the dip and add Alphabet stock to your portfolio.
