As of closing bell on May 29, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average have each generated roughly breakeven returns on the year. Normally, returns this mundane wouldn't be celebrated. But when you consider that each of the major stock market indexes declined by double digits just a month ago, getting back to even seems like a win.
One of the more interesting aspects of the price movement in the stock market this year is annotating precisely when major volatility occurred. According to recently published data, it appears that the market's most pronounced declines and gains throughout 2025 can be traced back to major announcements from Washington, D.C.
Going a little deeper, whenever President Donald Trump has announced new tariff policies, the market reacted negatively. But when he has eased the pressure, stocks experienced sharp rebounds. This dynamic has become known as the TACO trade -- which stands for "Trump always chickens out."
Considering the tariff situation is still very much ongoing, I suspect the capital markets will continue operating under heightened levels of uncertainty. Nevertheless, I see two no-brainer artificial intelligence (AI) stocks that look like great buys right now -- regardless of TACO trade volatility. After all, trading based on what you think Trump may or may not do next is a short-term and risky approach to investing, but focusing on solid long-term opportunities amid the chaos is a wise choice.
Let's explore which stocks smart investors may want to consider buying the dip in as the TACO trade continues to make waves.
1. Nvidia
The first AI stock on my list is semiconductor king Nvidia (NVDA 1.01%). Not only does Nvidia dominate the market for high-performance chipsets known as graphics processing units (GPUs), but the company's overall performance has essentially become the ultimate barometer by which the AI industry is measured. Said differently, if Nvidia's business is growing, investors tend to remain bullish on the AI boom.
From a macro standpoint, Nvidia stands to benefit from ongoing investment in AI infrastructure. So long as cloud hyperscalers Amazon, Microsoft, and Alphabet, as well as tech titans like Meta Platforms, Oracle, and Apple, are building out data centers and buying chips, Nvidia is positioned to capture a portion of this multitrillion-dollar opportunity.
As far as tariffs go, the biggest threat to Nvidia's business right now is its limited opportunity in China. New export controls coupled with rising competition from China-based Huawei has put Nvidia in a tough spot. Nevertheless, Nvidia has opportunities to maneuver around China-related headwinds.
For instance, the company recently won multiple contracts in the United Arab Emirates (UAE) Kingdom of Saudi Arabia (KSA) -- each of which will be outfitting AI data centers with Nvidia's latest Blackwell GPUs. Moreover, rumors are swirling that Elon Musk's AI start-up, xAI, could be purchasing an estimated $40 billion worth of chips for its next GPU cluster.
As I previously predicted, I think Nvidia stock is going to rebound considerably throughout the latter half of 2025 as I suspect tariff-driven fears will subside.
NVDA Market Cap data by YCharts
While there has been some recent valuation expansion following Nvidia's monster first-quarter earnings report, the stock still looks reasonable compared to historical levels on a forward price-to-earnings (P/E) basis.
Image source: Getty Images.
2. Amazon
Next up on my list is Amazon. On the surface, this might look like a head-scratcher. I'll concede that Amazon's core e-commerce business is pretty vulnerable to tariffs.
However, I'm not distracted by these headwinds at the moment.
NASDAQ: AMZN
Key Data Points
Instead, I've been analyzing Amazon based on two other areas of the business. First, the company's cloud infrastructure unit, Amazon Web Services (AWS), continues to accelerate sales and widen operating margins. To me, this signals that the company's investments in AI have, so far, paid off.
What's more lucrative, however, is that AWS accounts for the majority of operating profits for Amazon's entire business. This is important, because even during a time of economic uncertainty, the performance from AWS has remained strong and continued minting heaps of cash flow for Amazon. These robust unit economics provide Amazon with a high degree of operating leverage -- allowing the company to double down and reinvest in high-growth areas.
In turn, Amazon has a unique ability to stitch more AI-driven investments across the broader fabric of its ecosystem -- from e-commerce, logistics, brick-and-mortar retail, advertising, streaming, subscription services, and even direct-to-consumer healthcare.
It's these dynamics that may have caught the eye of billionaire hedge fund manager Bill Ackman, who recently joined Warren Buffett and Cathie Wood in adding Amazon to his portfolio.
I think Amazon is well on its way to becoming Wall Street's first $5 trillion company. While the company could face some turbulence in the near term due to tariffs, this is not the first time the tech giant has dealt with a challenging regulatory environment. Yet, in the long run, Amazon has continued to manage to diversify its platform and build a number of multibillion-dollar businesses profitability.
I see Amazon as an under-the-radar opportunity right now and I would take advantage of any dips as the TACO trade plays out.
