Stock Market Reactions and Three Tech Picks Amid Tariff Concerns

Following President Donald Trump’s announcement regarding tariffs dubbed “Liberation Day,” stock markets experienced significant declines. Investors grew increasingly worried about the potential onset of a global trade war and its implications for the global economy. While this turbulence could lead to further pressure on stocks in the weeks ahead, it has also created attractive entry points for investors looking to capitalize on select tech stocks.

Here, we outline three tech stocks that may present good buying opportunities at their current valuations.

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1. Nvidia

Nvidia (NASDAQ: NVDA), a leader in growth among tech stocks, has recently seen its shares decline alongside many others. It currently boasts a forward price-to-earnings (P/E) ratio of just 23 based on analyst estimates for this year. Moreover, its price/earnings-to-growth (PEG) ratio sits near 0.4, indicating that it may be undervalued; stocks with PEGs below 1 are often considered bargains.

Despite recent price pressures, Nvidia has ample growth opportunities ahead. The company’s graphic processing units (GPUs) are at the forefront of the artificial intelligence (AI) revolution, a trend likely to continue unimpeded by trade tensions. Notably, semiconductors, where Nvidia specializes, are reportedly exempt from tariffs affecting Taiwan, where most semiconductors are produced.

Nvidia anticipates data center capital expenditures (capex) reaching $1 trillion by 2028, with cloud computing giants leading the charge. These firms plan to allocate $250 billion this year alone for AI-related capital investments. Numerous tech companies are striving to enhance AI models, and large enterprises are increasingly adopting hybrid cloud strategies for their AI initiatives.

Given its current valuation and the growth prospects, Nvidia appears to be a strong candidate for investors looking to buy on the dip.

Image source: Getty Images.

2. Amazon

As the world’s largest e-commerce retailer, Amazon (NASDAQ: AMZN) faced a hit due to the recently announced tariffs. Many products sold on its platform come from overseas, particularly China, so higher goods prices are anticipated. This may lead to a slowdown in sales if a global recession emerges.

Nonetheless, while goods are predominantly sourced from foreign countries, Amazon’s competitive landscape remains largely unchanged. In the long term, e-commerce’s growth prospects remain positive. Additionally, Amazon has effectively driven earnings growth through its higher-margin advertising business, as well as through logistics and warehouse efficiency improvements powered by AI.

Importantly, Amazon extends beyond merely e-commerce. Its most profitable segment, Amazon Web Services (AWS), is enhancing data center infrastructure to keep pace with rising demands for AI services. Furthermore, Amazon has developed custom AI chips, providing a cost advantage in the market. With a forward P/E of just 28.5, Amazon’s stock is among the most attractively priced it has been in a decade.

3. Meta Platforms

Meta Platforms (NASDAQ: META) has also felt the impact of tariff announcements. Despite these pressures, the company reported a 21% revenue growth last quarter, driven significantly by its AI initiatives. These efforts are helping advertisers create more effective campaigns, allowing users to engage more on Meta’s platforms and enhancing ad visibility.

However, since Meta relies heavily on advertising revenue, increased costs and potential economic downturns may pose challenges in the near term. Typically, during sluggish economic periods, advertisers often reduce spending. Nonetheless, Meta stands as a dominant player in digital advertising, frequently remaining a last resort for ad spend cuts.

Additionally, Meta is exploring growth opportunities through its social media platform, Threads. Although currently in the audience-building phase without contributing to revenue, it is poised for strong monetization in the future.

With the recent decline in its share price, Meta now trades at a forward P/E just above 21, signifying a bargain valuation for a leading digital advertising company known for its ability to innovate.

Should you invest $1,000 in Nvidia right now?

Before considering an investment in Nvidia, it is wise to explore the findings of the Motley Fool Stock Advisor analyst team. They have identified what they perceive to be the 10 best stocks available for purchase today, with Nvidia not appearing on that list. The stocks recognized by the team are poised for substantial returns in the upcoming years.

Consider the opportunity that arose when Nvidia was first recommended on April 15, 2005. An initial investment of $1,000 would have turned into $578,035!

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is also a member of The Motley Fool’s board of directors. Geoffrey Seiler holds no position in the mentioned stocks. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Nvidia. The Motley Fool maintains a disclosure policy.

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