President Trump has made radical changes to U.S. trade policy since taking office. The tariffs imposed by his administration have pushed the average tax rate on U.S. imports to its highest level in decades, causing some investors to lose confidence in American stocks.
Consequently, the S&P 500 (^GSPC -0.67%), the best gauge for the U.S. stock market, has underperformed benchmark indexes in Asia, Canada, and Europe this year. The index has also underperformed stock markets in emerging economies like Brazil, Mexico, and many African countries.
Nevertheless, JPMorgan CEO Jamie Dimon recently told Bloomberg the U.S. is still the best place to invest: "If you were to take all of your money and put it in one country, it would still be America. I mean, it's still the most prosperous nation on the planet."
Indeed, 21 of the 25 largest companies in the world are American companies. Included on that list are Nvidia (NVDA -1.02%) and Amazon (AMZN -0.87%). Here's why those stocks are smart long-term investments.
Image source: Getty Images.
1. Nvidia
Nvidia earns about half of its revenue from the United States, but that number has trended higher in recent years because the U.S. possesses more than 60% of artificial intelligence (AI) compute capacity worldwide. The company is the leader in data center graphics processing units (GPUs), chips that are the industry standard in accelerating AI workloads.
Importantly, while generative AI has dominated headlines since ChatGPT launched in 2022, the AI revolution is still in its early stages. Nvidia has the hardware and software needed to develop autonomous robots and self-driving cars. "We build technology that almost every self-driving car company uses," CEO Jensen Huang told analysts earlier this year.
Nvidia reported strong financial results in the fourth quarter of fiscal 2025, which ended in January. Revenue rose 78% to $39 billion on strong demand for data center hardware driven by the AI boom. Non-GAAP (generally accepted accounting principles) net income increase 71% to $0.89 per diluted share The only disappointment was an 3-point decline in gross margin, but CFO Colette Kress says that figure will rebound as Blackwell GPU sales ramp this year.
Importantly, Nvidia is not immune to tariffs because most of its chips are made in Taiwan. However, the extent to which the company may be impacted is unclear because the Trump administration has not finalized duties on imported semiconductors. Nevertheless, Nvidia, with help from Taiwan Semiconductor, recently started making chips in the U.S., and production will increase next year.
Wall Street expects Nvidia's adjusted earnings to increase at 37% annually through fiscal 2027. That makes the current valuation of 44 times earnings look quite reasonable, especially because Nvidia beat the consensus estimate by an average of 10% in the last six quarters. Therefore, investors hoping to benefit from the AI boom should own shares.
2. Amazon
Amazon earns a little more than two-thirds of its revenue from the United States, but the company operates globally. It runs the largest e-commerce marketplace outside of China, it is the third-largest adtech company worldwide, and Amazon Web Services (AWS) is the largest public cloud as measured by infrastructure and platform services spending.
Amazon is well positioned for long-term growth because those three markets are forecast to expand quickly in the coming years. Through 2030, online retail sales are forecast to grow at 11% annually, digital ad spending is forecast to grow at 15% annually, and cloud computing sales are forecast to grow at 20% annually, according to Grand View Research.
Amazon reported solid first-quarter financial results. Revenue rose 9% to $155 billion, and GAAP net income jumped 62% to $1.59 per diluted share. But management gave cautious guidance. Second-quarter operating income is expected to land between $13 billion and $17.5 billion, which implies growth between negative 11% to positive 19%. The uncertainty is due to tariffs.
Importantly, Amazon is not insulated from tariffs simply because it earns most revenue in the U.S. Morgan Stanley analyst Brian Nowak estimates 60% of third-party sellers have at least some exposure to China, and that Chinese sellers account for a significant portion of ad spending on the marketplace. But he also believes Amazon's global supplier network will still let the company offer online shoppers the lowest prices in many cases.
Wall Street estimates Amazon's earnings will increase at 10% annually through 2026. That makes the current valuation of 33 times earnings look rather expensive, but analysts may be underestimating the company. Amazon beat the consensus earnings estimate by an average of 22% in the last six quarters, and I think that trend will continue as it leans on AI to boost revenue and efficiency across its business.
