Market turmoil has sent tech stocks into a tailspin in early 2025. As Donald Trump's trade policies rattle global markets, even the most dominant technology companies haven't been spared. The S&P 500 has shed over 11% year to date as I write this, while the tech-heavy Nasdaq-100 has plummeted more than 16%. For opportunistic investors, however, this pullback presents a compelling chance to acquire shares of world-class businesses at bargain prices.
Rather than fleeing technology during this downturn, forward-thinking investors should consider building positions in companies poised to benefit from unstoppable trends like artificial intelligence (AI). Despite near-term headwinds, these foundational technologies continue transforming industries worldwide. Two tech giants, Nvidia(NASDAQ: NVDA) and Meta Platforms(NASDAQ: META), have been particularly hard hit and now offer exceptional value for long-term shareholders willing to weather the current volatility.
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Nvidia: The AI hardware leader at a steep discount
Nvidia shares have plummeted 34% from their 52-week high amid escalating U.S.-China tensions and new export restrictions. This dramatic sell-off has compressed Nvidia's valuation to just 21.8 times earnings estimates, far lower than the multiple it commanded at recent peaks. Last week's announcement that the company expects $5.5 billion in write-offs related to its China-specific H20 chip only accelerated the decline, yet the fundamental growth story remains intact for markets outside China.
What separates Nvidia from competitors is its formidable economic moat, built on both market-leading graphics processing unit (GPU) hardware and its proprietary Compute Unified Device Architecture (CUDA) software platform. This potent combination creates significant switching costs for AI developers, allowing Nvidia to maintain its dominance even as other tech giants such as Advanced Micro Devices work to develop alternatives. Though some analysts expect China-related revenue to rapidly approach zero, ongoing AI investments by businesses worldwide should support strong GPU sales throughout 2025.
The AI revolution remains in its earliest stages, with Nvidia positioned as the primary beneficiary of this exponential growth market. The company has expanded beyond its core GPU business into networking, software, and services, significantly enlarging its addressable market. With shares trading at their lowest valuation in years, investors have a rare opportunity to acquire this AI juggernaut at prices that substantially undervalue its long-term potential in the face of continued global AI adoption and despite current geopolitical uncertainties.
Meta Platforms: Social media giant with AI upside
Meta shares have tumbled 33% from their 52-week highs amid the broader market sell-off as I write this, creating an attractive entry point for investors in this social media powerhouse. Its stock now trades at just 19 times forward earnings estimates, down from 24 a year ago. With nearly 4 billion monthly active users across its applications, including Facebook, Instagram, WhatsApp, and Messenger, Meta maintains unrivaled scale in the social media space, benefiting from the secular shift toward digital advertising.
Moreover, the social media titan recently unveiled Llama 4, its next-generation large language model capable of understanding and generating content across various formats, including text, images, and video. This multimodal AI system puts Meta roughly at par with the latest models from Anthropic, Alphabet, and OpenAI, but Meta's true advantage lies in its unmatched distribution network.
As AI competition shifts from model development to distribution and monetization, Meta's massive user base provides a natural platform to deploy these technologies at scale, potentially driving higher engagement and advertising effectiveness.
While tariff-induced economic slowdowns could temporarily depress advertising spending, Meta might benefit from the current uncertainty surrounding TikTok's U.S. operations as advertisers seek alternative platforms. The company's dual strategy focuses on user engagement improvements through features like Stories and Reels, while enhancing its ad targeting algorithms to deliver better results for advertisers.
Though Meta faces potential regulatory challenges with a monopoly case in the U.S., and its Reality Labs division continues to consume billions in capital, these risks appear more than accounted for at current price levels. For investors seeking exposure to both digital advertising and AI, Meta offers a compelling combination of current profitability and growth potential.
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Suzanne Frey, an executive at Alphabet, 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 a member of The Motley Fool's board of directors. George Budwell has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
