Why AI Stocks Still Shine Despite Market Mayhem | Image Source: www.fool.com
NEW YORK, April 13, 2025 - As the stock market develops with a barrier of uncertainty fuelled by Trump’s aggressive administrative tariffs, many investors warn their bets in high growth sectors, especially artificial intelligence. The composite Nasdaq has entered the bear market, covering more than 20% of its previous peak. The feeling has shifted from euphoria to hesitation, especially after the technological indices experienced sharp declines following the White House’s recent economic policy exercises against China and other important trading partners.
However, in the midst of all these turbulences, some experts say that withdrawal created an opportunity to buy, not a red flag. In particular, AI-oriented actions such as Nvidia, Meta Platforms, Broadcom and Taiwan Semiconductor Manufacturing (TSMC) are at the centre of the discussions. These companies, at the heart of AI’s global supply chain, have seen their assessments agitated, but their long-term stories remain convincing. According to recent analysis of financial power plants such as Morgan Stanley, Goldman Sachs and JPMorgan, several billion investors have withdrawn from risky bets, but this does not mean they are leaving IV. Instead, they look and wait.
Why are AI actions falling now?
The recent slide in IA actions has nothing to do with its foundations and everything to do with external pressures. On April 2, former President Donald Trump introduced radical tariffs against Chinese goods and selected other countries, with rates of up to 32%. This movement, while aiming to revive American manufacturing, sent shock waves through global supply chains and investor sentiment.
According to Reuters, this new tariff regime triggered hedge fund outflows, particularly in high volatility areas as emerging markets in Asia and Europe. Morgan Stanley’s data show that long-term U.S. funds reduced their net benefit to only 37%, compared to more than 50% before the year. JPMorgan echoed this warning, highlighting leverage levels in near-historic losses. While AI’s shares were once loved by billion-dollar portfolios, the current market tells a more complex story, where even the bullies will come back to re-evaluate.
What does long-term optimism lead to AI actions?
Although short-term volatility dominates securities, the long-term thesis of IA remains intact. The AI arms race – particularly in areas such as large language models, chip design and data centre infrastructure – is too massive to be derailed by a few pieces of economic winds. Nvidia CEO Jensen Huang boldly projected the data centre’s capital costs to reach $1 billion by 2028. This is not speculation in heaven; It is supported by the growing demand for computer energy needed to operate and train next-generation AI systems.
Companies like Amazon, Alphabet and Meta Platforms – collectively called hyperclimates – pump billions into AI development. Amazon’s Andy Jassy emphasized that AWS needs to acquire hardware and build data centers long before monetization. In other words, the infrastructure must be in place before the AI revenue wave arrives. This sentiment supports the reasons why, despite economic uncertainties, major technologies will maintain AI funding aggressively.
What are the actions of artificial intelligence?
Among the crowd are three names because of their fundamental role in the AI ecosystem:
- Nvidia: Its GPUs power everything from consumer devices to massive AI training clusters. As per The Motley Fool, Nvidia’s new Blackwell architecture generated $11 billion in its first commercialization quarter, signaling insatiable demand. With a robust roadmap and planned annual updates, Nvidia’s moat only deepens.
- Meta Platforms: Known for social media, Meta is now emerging as an open-source AI champion. Its Llama language model is being used to fuel AI assistants and tools across its ecosystem. According to Yahoo Finance, this dual focus — social engagement and AI innovation — strengthens Meta’s revenue flywheel.
- Broadcom and TSMC: These firms manufacture the silicon critical to AI training and inference. Though Broadcom has dropped over 40% from its highs, investors with a long-term lens see a discount. Taiwan Semi, despite tariff scares, continues to enjoy a semiconductor exemption, safeguarding its dominant position.
How do tariffs affect IV companies?
On paper, tariffs sound like a death cell for global technology. However, thugs count. The 32 per cent tariff in Taiwan raised concerns among investors, but the semiconductors — essentially — were exempted. This means that TSMC can continue to provide companies such as Nvidia and Broadcom without immediate financial implications. However, wider tariffs increase operational friction and create inflationary undulations, particularly in the consumer sector.
This is where things get excited for companies like Meta, Alphabet and Amazon. Its main activity depends on consumer activity and advertising. If tariffs increase consumer spending, this could have an impact on advertising revenues and reduce force costs, including by reducing investment in data centres. But according to Amazon Jassy, it’s unlikely. AI is seen as an opportunity ”once in a generation,” which is worth investing in economic uncertainty.
Questions asked
Is now a good time to buy AI stocks?
Yes, if you have a long-term horizon. Shares like Nvidia, Meta and Broadcom are traded at attractive P/E ratios – Nvidia at 23x and Meta at 21x. This reflects the investor’s fears, not the company’s fundamentals. If AI demand continues to increase, today’s prices may seem to be winning back.
How risky are these investments with new tariffs?
Risk has certainly increased, especially in the short term. Tariffs introduce the supply chain and inflationary problems. But for long-term investors focused on fundamentals and innovation, these actions still offer an asymmetric advantage.
Can AI hyperscalers afford to continue investing in infrastructure?
Yes, and they are. Despite the risks of short-term advertising revenues, these companies generate massive free cash flows. Their current financial strength allows them to build an AI infrastructure before demand, configuring for the future domain.
Why are hedge funds pulling back?
According to Goldman Sachs and Morgan Stanley, hedge funds take a “risk” position due to tariff uncertainty. The net lever fell almost every time. But this does not necessarily reflect a loss of faith in AI - just a tactical pause.
What’s the upside for AI investors in the next five years?
Massivo. While projections such as Huang’s $1 billion data centre for 2028 are being made, the entire AI value chain – from chip designers to cloud providers – greatly benefits. The key is patience.
Personal perspective : Zoomer
I have seen that markets have been evolving in cycles for years, and one thing is consistent – short-term fear rarely corresponds to long-term potential. Today feels a lot like the Internet early. At the time, people challenged their commercial viability. Today, this doubt seems laughable. With AI, we’re still law I. The infrastructure is still under construction, the software layer is evolving and monetization is beginning to develop.
Today’s volatility is uncomfortable but not unprecedented. The investors who embraced uncertainty in the dot-com era and were disciplined were those who caught the Amazon and Google waves. The AI wave could be slower than expected, and sometimes more disorderly – but its potential is also transformative. The current descent is less a cliff and more a curve on the road.
Just as the headlines shout, ”Bumbuja AI”, considers that bubbles do not build foundations, and at the moment this is exactly what companies like Nvidia and Meta do. For those who can approach and stay in the course, the future could be remarkably bright.
