Market Challenges Present Buying Opportunities for Amazon and Super Micro

The stock market does not consistently rise, which is beneficial. This volatility helps ensure asset prices remain aligned with reality and provides new investors with chances to buy undervalued stocks. Despite the S&P 500 index falling by 8% year-to-date, the ongoing tariff situation under President Donald Trump may present an opportunity to acquire quality companies at a discount.

In this context, let’s examine why both Amazon (NASDAQ: AMZN) and Super Micro (NASDAQ: SMCI) could be attractive investments.

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Amazon’s Resilience in Turbulent Times

Despite a 26% decline from its all-time high of $242 in February, Amazon appears resilient amid trade war difficulties. The e-commerce leader profits from products sold by third-party vendors, many sourced from countries significantly affected by tariffs, including China. Additionally, its global operations may face backlash, particularly in Europe, but these concerns seem exaggerated.

According to its fourth-quarter report, Amazon’s international business contributed only $1.3 billion to its operational income, amounting to 14% of the company’s total $9.25 billion for that period. Amazon’s dominant reliance on the U.S. market and its cloud computing division, Amazon Web Services (AWS), are central to its business model, providing services that generally escape tariff-related impacts.

Even amid tariff-related anxieties, Amazon continues to grow well. Its fourth-quarter sales rose by 10% year over year, reaching $187.9 billion. Although there is speculation about higher online prices due to tariffs, Amazon’s third-party business model limits its vulnerability. Vendors, not Amazon itself, bear the burden of any margin reductions.

The proposed tariffs on Chinese goods could considerably challenge Amazon’s fast-growing competitors like Shien and Temu, which have previously benefited from the U.S.’s de minimis exemption allowing tax-free imports of packages valued under $800. The Trump administration’s plans to close this loophole in May could strengthen Amazon’s competitive position in the fast fashion market.

Super Micro Computer: A Promising Recovery

Super Micro’s stock has fallen by 72% since reaching an all-time high in March, but it faced issues before the tariff crisis. The server manufacturer dealt with allegations of accounting irregularities, the resignation of its auditor, and delays in quarterly filings that threatened its listing on the Nasdaq exchange. Fortunately, many of these problems have been addressed.

An independent review completed in December revealed no misconduct within the management or board of directors of Super Micro. By March, the company regained compliance with Nasdaq after submitting its overdue regulatory paperwork.

Image source: Getty Images.

With these hurdles lifted, potential investors can now pay attention to the company’s strong fundamentals. Super Micro is at the forefront of the computer server and data center equipment market, particularly in AI workloads.

Sales are expected to surge significantly, with management anticipating a 54% increase in second-quarter revenue, projecting between $5.6 billion and $5.7 billion. This growth rate is impressive for a company with a price-to-sales (P/S) ratio of 1 and a forward price-to-earnings (P/E) ratio of 9. Despite potential tariff risks, Super Micro’s ongoing manufacturing expansion in California equips it well to navigate market uncertainties.

Navigating Market Uncertainty

In the coming months, the unpredictability of Trump’s trade policies may pose a greater challenge than the tariffs themselves. The fluctuating rates and random alterations to product lists create an unstable environment for businesses, complicating long-term planning and investment strategies.

This inconsistency in trade policies is likely to dampen stock prices throughout 2025 and beyond. Nevertheless, both Amazon and Super Micro appear capable of withstanding these tribulations thanks to their strong domestic operations and connections to the high-growth AI sector. Between the two, Super Micro may present a more attractive buy, given its low valuation and minimized downside risk.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is part of The Motley Fool’s board of directors. Will Ebiefung holds shares in Super Micro Computer. The Motley Fool recommends and has positions in Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.