The stock market doesn't go up all the time. But that's OK, because it prevents asset prices from becoming out of touch with reality while giving new investors the chance to scoop up deals. With the S&P 500 index down by 8% year to date, President Donald Trump's tariff crisis could be an opportunity to buy quality stocks for cheap.
Let's explore why Amazon (AMZN 3.31%) and Super Micro (SMCI 8.85%) could make great bets.
NASDAQ: AMZN
Key Data Points
Amazon
With shares down by 26% from an all-time high of $242 reached in February, Amazon might look like a loser in a trade war scenario. The e-commerce giant retails products sold from third-party shops, often manufactured in highly tariffed countries like China. Furthermore, its international business could expose it to anti-American backlash, especially in Europe. That said, both challenges look overblown.
In the fourth quarter, Amazon's international business only generated $1.3 billion in operational income. That's just 14% of the company's total of $9.25 billion for the quarter. The company overwhelmingly relies on its home market, the U.S., and its cloud computing segment, Amazon Web Services (AWS), which specializes in digital services and infrastructure that are largely immune from tariffs.
Despite its large size, Amazon is growing at a respectable clip, with fourth-quarter sales jumping 10% year over year to $187.9 billion. While there is some concern that tariffs could raise prices for online goods, Amazon operates a mostly third-party business model. That means vendors and suppliers, not Amazon, will feel the brunt of margin erosion.
The prospects of large tariffs on China could also undermine Amazon's fast-growing rivals like Shien and Temu, which previously took advantage of the U.S.' de minimis import exemption, which allowed packages worth less than $800 to enter the country tax-free. The Trump administration plans to close this exemption in May, which could bolster Amazon's economic moat in the market for low-cost, fast fashion products.
NASDAQ: SMCI
Key Data Points
Super Micro Computer
With shares down 72% from an all-time high reached in March, Super Micro's troubles started long before Trump's tariff crisis. Last year, the server maker faced challenges ranging from accusations of accounting irregularities, the resignation of its auditor, and delayed quarterly filings that raised the possibility that its shares could be delisted from the Nasdaq exchange. However, most of these headwinds have since been resolved.
In December, Super Micro announced the completion of an independent review that found no evidence of misconduct from its management or board of directors. Roughly three months later, it regained compliance with Nasdaq by filing its delayed regulatory forms.
Image source: Getty Images.
Now that these challenges seem largely resolved, investors and analysts can focus on the company's promising fundamentals as it helps pioneer the market for computer servers and data center equipment for AI workloads.
Business is booming. Management expects second-quarter sales to grow 54% year over year to a range of $5.6 billion to $5.7 billion, which is a remarkable clip for a company valued at a price-to-sales (P/S) ratio of just 1 and a forward P/E of 9. And while Super Micro has some exposure to tariff-related uncertainty, it is positioned to weather the storm because of the ongoing expansion of its manufacturing capacity in California.
Markets hate uncertainty
Over the coming months, the biggest problem with Trump's trade policy might not be the tariffs themselves but the lack of consistency. Levy rates change seemingly on a weekly basis while different products are arbitrarily added or removed from the list. These conditions make it very difficult for businesses to plan and make the investments needed to grow -- either in the U.S. or internationally.
Trump's on-again, off-again trade policy will likely have a dampening effect on stock prices for the rest of 2025 and beyond. That said, Amazon and Super Micro seem capable of weathering the storm because of their U.S.-focused business models and exposure to the high-growth AI industry. Between the two companies, Super Micro looks like the stronger buy because its rock-bottom valuation minimizes downside risk.
