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Globe and Mail
an hour ago
- Business
- Globe and Mail
2 No-Brainer Artificial Intelligence (AI) Stocks to Buy Hand Over Fist During the TACO Trade
As of closing bell on May 29, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average have each generated roughly breakeven returns on the year. Normally, returns this mundane wouldn't be celebrated. But when you consider that each of the major stock market indexes declined by double digits just a month ago, getting back to even seems like a win. One of the more interesting aspects of the price movement in the stock market this year is annotating precisely when major volatility occurred. According to recently published data, it appears that the market's most pronounced declines and gains throughout 2025 can be traced back to major announcements from Washington, D.C. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Going a little deeper, whenever President Donald Trump has announced new tariff policies, the market reacted negatively. But when he has eased the pressure, stocks experienced sharp rebounds. This dynamic has become known as the TACO trade -- which stands for "Trump always chickens out." Considering the tariff situation is still very much ongoing, I suspect the capital markets will continue operating under heightened levels of uncertainty. Nevertheless, I see two no-brainer artificial intelligence (AI) stocks that look like great buys right now -- regardless of TACO trade volatility. After all, trading based on what you think Trump may or may not do next is a short-term and risky approach to investing, but focusing on solid long-term opportunities amid the chaos is a wise choice. Let's explore which stocks smart investors may want to consider buying the dip in as the TACO trade continues to make waves. 1. Nvidia The first AI stock on my list is semiconductor king Nvidia (NASDAQ: NVDA). Not only does Nvidia dominate the market for high-performance chipsets known as graphics processing units (GPUs), but the company's overall performance has essentially become the ultimate barometer by which the AI industry is measured. Said differently, if Nvidia's business is growing, investors tend to remain bullish on the AI boom. From a macro standpoint, Nvidia stands to benefit from ongoing investment in AI infrastructure. So long as cloud hyperscalers Amazon, Microsoft, and Alphabet, as well as tech titans like Meta Platforms, Oracle, and Apple, are building out data centers and buying chips, Nvidia is positioned to capture a portion of this multitrillion-dollar opportunity. As far as tariffs go, the biggest threat to Nvidia's business right now is its limited opportunity in China. New export controls coupled with rising competition from China-based Huawei has put Nvidia in a tough spot. Nevertheless, Nvidia has opportunities to maneuver around China-related headwinds. For instance, the company recently won multiple contracts in the United Arab Emirates (UAE) Kingdom of Saudi Arabia (KSA) -- each of which will be outfitting AI data centers with Nvidia's latest Blackwell GPUs. Moreover, rumors are swirling that Elon Musk's AI start-up, xAI, could be purchasing an estimated $40 billion worth of chips for its next GPU cluster. As I previously predicted, I think Nvidia stock is going to rebound considerably throughout the latter half of 2025 as I suspect tariff-driven fears will subside. NVDA Market Cap data by YCharts While there has been some recent valuation expansion following Nvidia's monster first-quarter earnings report, the stock still looks reasonable compared to historical levels on a forward price-to-earnings (P/E) basis. 2. Amazon Next up on my list is Amazon. On the surface, this might look like a head-scratcher. I'll concede that Amazon's core e-commerce business is pretty vulnerable to tariffs. However, I'm not distracted by these headwinds at the moment. Instead, I've been analyzing Amazon based on two other areas of the business. First, the company's cloud infrastructure unit, Amazon Web Services (AWS), continues to accelerate sales and widen operating margins. To me, this signals that the company's investments in AI have, so far, paid off. What's more lucrative, however, is that AWS accounts for the majority of operating profits for Amazon's entire business. This is important, because even during a time of economic uncertainty, the performance from AWS has remained strong and continued minting heaps of cash flow for Amazon. These robust unit economics provide Amazon with a high degree of operating leverage -- allowing the company to double down and reinvest in high-growth areas. In turn, Amazon has a unique ability to stitch more AI-driven investments across the broader fabric of its ecosystem -- from e-commerce, logistics, brick-and-mortar retail, advertising, streaming, subscription services, and even direct-to-consumer healthcare. It's these dynamics that may have caught the eye of billionaire hedge fund manager Bill Ackman, who recently joined Warren Buffett and Cathie Wood in adding Amazon to his portfolio. I think Amazon is well on its way to becoming Wall Street's first $5 trillion company. While the company could face some turbulence in the near term due to tariffs, this is not the first time the tech giant has dealt with a challenging regulatory environment. Yet, in the long run, Amazon has continued to manage to diversify its platform and build a number of multibillion-dollar businesses profitability. I see Amazon as an under-the-radar opportunity right now and I would take advantage of any dips as the TACO trade plays out. Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor 's total average return is979% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025 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. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Yahoo
2 hours ago
- Business
- Yahoo
2 No-Brainer Artificial Intelligence (AI) Stocks to Buy Hand Over Fist During the TACO Trade
Close analysis of President Trump's tariff rhetoric has shed light on some interesting patterns in the stock market. Semiconductor stocks have proven vulnerable during this period of new tariffs, but buying the dip could be a smart idea. Cloud infrastructure is another area that has strong long-term tailwinds as the AI narrative continues to chug along. 10 stocks we like better than Nvidia › As of closing bell on May 29, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average have each generated roughly breakeven returns on the year. Normally, returns this mundane wouldn't be celebrated. But when you consider that each of the major stock market indexes declined by double digits just a month ago, getting back to even seems like a win. One of the more interesting aspects of the price movement in the stock market this year is annotating precisely when major volatility occurred. According to recently published data, it appears that the market's most pronounced declines and gains throughout 2025 can be traced back to major announcements from Washington, D.C. Going a little deeper, whenever President Donald Trump has announced new tariff policies, the market reacted negatively. But when he has eased the pressure, stocks experienced sharp rebounds. This dynamic has become known as the TACO trade -- which stands for "Trump always chickens out." Considering the tariff situation is still very much ongoing, I suspect the capital markets will continue operating under heightened levels of uncertainty. Nevertheless, I see two no-brainer artificial intelligence (AI) stocks that look like great buys right now -- regardless of TACO trade volatility. After all, trading based on what you think Trump may or may not do next is a short-term and risky approach to investing, but focusing on solid long-term opportunities amid the chaos is a wise choice. Let's explore which stocks smart investors may want to consider buying the dip in as the TACO trade continues to make waves. The first AI stock on my list is semiconductor king Nvidia (NASDAQ: NVDA). Not only does Nvidia dominate the market for high-performance chipsets known as graphics processing units (GPUs), but the company's overall performance has essentially become the ultimate barometer by which the AI industry is measured. Said differently, if Nvidia's business is growing, investors tend to remain bullish on the AI boom. From a macro standpoint, Nvidia stands to benefit from ongoing investment in AI infrastructure. So long as cloud hyperscalers Amazon, Microsoft, and Alphabet, as well as tech titans like Meta Platforms, Oracle, and Apple, are building out data centers and buying chips, Nvidia is positioned to capture a portion of this multitrillion-dollar opportunity. As far as tariffs go, the biggest threat to Nvidia's business right now is its limited opportunity in China. New export controls coupled with rising competition from China-based Huawei has put Nvidia in a tough spot. Nevertheless, Nvidia has opportunities to maneuver around China-related headwinds. For instance, the company recently won multiple contracts in the United Arab Emirates (UAE) Kingdom of Saudi Arabia (KSA) -- each of which will be outfitting AI data centers with Nvidia's latest Blackwell GPUs. Moreover, rumors are swirling that Elon Musk's AI start-up, xAI, could be purchasing an estimated $40 billion worth of chips for its next GPU cluster. As I previously predicted, I think Nvidia stock is going to rebound considerably throughout the latter half of 2025 as I suspect tariff-driven fears will subside. While there has been some recent valuation expansion following Nvidia's monster first-quarter earnings report, the stock still looks reasonable compared to historical levels on a forward price-to-earnings (P/E) basis. Next up on my list is Amazon. On the surface, this might look like a head-scratcher. I'll concede that Amazon's core e-commerce business is pretty vulnerable to tariffs. However, I'm not distracted by these headwinds at the moment. Instead, I've been analyzing Amazon based on two other areas of the business. First, the company's cloud infrastructure unit, Amazon Web Services (AWS), continues to accelerate sales and widen operating margins. To me, this signals that the company's investments in AI have, so far, paid off. What's more lucrative, however, is that AWS accounts for the majority of operating profits for Amazon's entire business. This is important, because even during a time of economic uncertainty, the performance from AWS has remained strong and continued minting heaps of cash flow for Amazon. These robust unit economics provide Amazon with a high degree of operating leverage -- allowing the company to double down and reinvest in high-growth areas. In turn, Amazon has a unique ability to stitch more AI-driven investments across the broader fabric of its ecosystem -- from e-commerce, logistics, brick-and-mortar retail, advertising, streaming, subscription services, and even direct-to-consumer healthcare. It's these dynamics that may have caught the eye of billionaire hedge fund manager Bill Ackman, who recently joined Warren Buffett and Cathie Wood in adding Amazon to his portfolio. I think Amazon is well on its way to becoming Wall Street's first $5 trillion company. While the company could face some turbulence in the near term due to tariffs, this is not the first time the tech giant has dealt with a challenging regulatory environment. Yet, in the long run, Amazon has continued to manage to diversify its platform and build a number of multibillion-dollar businesses profitability. I see Amazon as an under-the-radar opportunity right now and I would take advantage of any dips as the TACO trade plays out. Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 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. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. 2 No-Brainer Artificial Intelligence (AI) Stocks to Buy Hand Over Fist During the TACO Trade was originally published by The Motley Fool Sign in to access your portfolio
The Independent
2 days ago
- Business
- The Independent
Wall St's TACO tariff code is good for Trump, ‘If he can take the win,' ex-staffer reveals to CNN
While Wall Street 's 'TACO trade' strategy has riled President Donald Trump, his former White House staffer argues it might actually be a 'win' for the president. In the wake of Trump's tariff volatility, Wall Street investors are now engaging in TACO trade: buying stock in the slump, knowing that the president's backtracking will inevitably cause a stock market rebound. During an appearance on Friday's episode of CNN News Central, former White House director of strategic communications Alyssa Farah Griffin argued that the net effect of the TACO trades has been positive for the president. 'Trump was handed three huge political wins this week, if he can accept them and just take the win,' she told host John Berman. The acronym, which stands for 'Trump Always Chickens Out,' a dig at the president's on-again, off-again approach to tariffs, has been adopted by financial analysts after Financial Times columnist Robert Armstrong coined it. The conservative pundit commented on a challenging week for the president, following Elon Musk's departure from the White House and the U.S. Court of International Trade's decision to block Trump's tariffs, which an appeals court temporarily reinstated on Thursday. 'And then finally, TACO, he's going to hate this,' she said. 'We all know what we saw, how he reacted to the reporter's question,' Griffin added, making reference to the president rebuking a reporter in the Oval Office Wednesday for asking him a 'nasty' question about the new Wall Street moniker. 'But that is huge that Wall Street traders have actually learned how to sort of call Trump's bluff. So he's not able to cause this sort of market volatility that we saw in the first few months,' she added. 'Those are all good things in the long run for Donald Trump's economy and for his future agenda. But all of them look like losses, but actually are wins if he can simply take the win.' Last week, Trump threatened to impose 50 percent tariffs on goods from the European Union from June 1, sending stocks and the dollar sliding. Two days later, Trump said he'd delay imposing the levies until July 9, with markets reopening Tuesday well in the green. After levying 125 percent tariffs on China earlier this month, Washington and Beijing agreed to a 90-day suspension. Stock markets surged after the announcement.
Yahoo
3 days ago
- Business
- Yahoo
Hiltzik: Explaining the newest Wall Street craze — the 'TACO' trade
Stock market investors don't have much to cheer about in the second Trump term, except perhaps for a new and almost flawless trading strategy — the TACO trade. The acronym, coined by Financial Times columnist Robert Armstrong, stands for "Trump Always Chickens Out." ("Acronyms are very powerful, especially when they remind people of foodstuffs," Armstrong told his colleague Katie Martin on an FT podcast.) That his observation points to the way to profit from stock trades in an uncertain environment was underscored by the market's response over the last few trading days to Trump's threat to levy a 50% tariff on imports from the European Union. The tariffs were to begin on June 1, or nine days later. Acronyms are very powerful, especially when they remind people of foodstuffs. Robert Armstrong, coiner of the TACO trade acronym Trump issued that threat on Friday, May 23. That day the Standard & Poor's 500 index fell more than 39 points, or 0.67%, and the Nasdaq index fell 188.53 points, or 1%. Two days later, on Sunday, Trump announced that he would defer the tariff increase until July 9. On Tuesday, the first trading day following the Memorial Day holiday, stocks jumped back up. The S&P rose 118.72 points, or 2.05%, and the Nasdaq rose nearly 462 points, or 2.47%. See how the TACO trade works? It's a two-step process: Buy the dip — the lowered prices following a Trump tariff announcement — and sell at the higher prices after Trump's inevitable chickening-out pushes stocks back up. You'll notice that the fall and rise weren't symmetrical — the strength of the recovery was greater than that of the decline. That can't be easily explained, except that it may suggest that hope is a stronger emotion than despair. This ride on the Trump tariff roller-coaster wasn't the first, and nowhere near the most violent. That trophy belongs to the period from April 2 through April 9, the "liberation day" tariff carousel. Read more: Hiltzik: No one understands Trump's thinking on tariffs. Here are the top guesses It will be recalled that on April 2, Trump announced a raft of "reciprocal" tariffs on every U.S. trading partner, plus a couple of jurisdictions that were not trading partners, including with no human inhabitants at all. The new tariffs were set as high as 50%. "The markets are going to boom," Trump told reporters. Sadly, no. The stock market crashed upon Trump's announcement, with the S&P falling nearly 5% the next day and the Nasdaq down nearly 6%. It was the worst day on the markets since a pandemic-triggered fall in March 2020. Both indices continued to decline in subsequent days, as Commerce Secretary Howard Lutnick promised that "the President is not going to back off." Lutnick's crystal ball was clouded, too. On April 9, Trump did back off, announcing a 90-day pause to provide time for individualized bilateral negotiations. That triggered a TACO relief rally: The S&P gained 474 points, or 9.52% — its third-biggest one-day percentage gain since World War II. The Nasdaq gained 1,857 point or 12.16%, its second-biggest one-day percentage gain ever. Neither gain brought those indices back to where they had been on April 2, before Trump's "liberation day" announcement, however. It's also true that the downdraft and updrafts have even inspired suspicions that White House insiders with advance word of the announcements are trading stocks on the knowledge, though no such evidence has emerged. Sen. Adam Schiff (D-Calif.) tweeted on April 9 that Trump's 'constant gyrations in policy provide dangerous opportunities for insider trading. Who in the administration knew about Trump's latest tariff flip-flop ahead of time? Did anyone buy or sell stocks, and profit at the public's expense?' Investors at large haven't fully gotten their arms around the TACO trade, which is why the markets continue to shudder with every new tariff announcement and recover with every reversal. There may be a residual concern that this time the tariffs will stick. Trump plainly resents the sentiment underlying the acronym. "It's called negotiation," he said when asked about it at a news conference Wednesday. "That's a nasty question," he added. But it happens that the acronym isn't the biggest embarrassment confronting his tariff policy: On Wednesday, the U.S. Court of International Trade invalidated most of Trump's tariffs, including the April 2 levies, on grounds that he didn't have the statutory authority to impose them. Still, the in-and-out running of Trump's tariff policies carries some important lessons for investors — and anyone else obsessing over Trump's thought processes. Read more: Hiltzik: Confused about Trump's tariff policy? Join the club. One is that Trump has turned Theodore Roosevelt's maxim to "speak softly and carry a big stick" on its head: He speaks loudly and carries barely any stick at all. Another is a corollary to the first, which is that it may be inadvisable to panic over a short-term Trump-driven downdraft in the markets. Money manager Ben Carlson made that point graphically on his Wealth of Common Sense website. "What if you panic sold right when things seemed the bleakest right before that crazy 10% up day in early April [that is, April 9] and then panic bought back in the next day?" he wrote. Investors who stayed fully invested in the S&P 500 through the turmoil emerged with a gain of 0.7% on the year, through April 9, Carlson calculated. Those who panic-sold, missing out on the recovery, ended with a year-to-date loss of 8.1%. Trump's habit of acting through bluster has permeated much of his policymaking in his second term, not only on tariffs. His threats against universities and law firms sound horrific and determined enough to have frightened some of those institutions into making preemptive deals to keep him from following through. As I've reported, the capitulators haven't bargained on Trump's love for bullying weaklings. Read more: Hiltzik: Trump fired a tariff torpedo at China — and hit Boeing right between the eyes Some of Trump's targets have cottoned on to his practice of letting bluster do the hard work of policymaking, rather than painstakingly drafting his policies so they're legally and constitutionally bulletproof. They have come to understand that a full-frontal counterattack is likely to bear fruit. That's been evident in the lawsuits that four major law firms filed in response to Trump's executive orders attacking them. Federal judges have granted three of the four firms summary judgment against the government; a judge's ruling in the fourth case is pending. The judges have focused on the fundamental feebleness of the executive orders, generally finding them to violate the firms' 1st Amendment rights, and rights to due process and equal protection under the law, among other infirmities. The most ringing critique of the Trump administration's lawyering was issued Tuesday by Judge Richard Leon of Washington, D.C., who declared Trump's executive order targeting the firm WilmerHale "unconstitutional ... in its entirety." Leon punctuated his order with, by my count, 27 exclamation marks, signifying his intense impatience with the quality of the government's arguments in his courtroom. "The cornerstone of the American system of justice is an independent judiciary and an independent bar willing to tackle unpopular cases, no matter how daunting," he wrote in the opening line of his order. "The Founding Fathers knew this!" (I'm not sure I've ever read a federal judge's order that has even one exclamation mark, let alone 27.) Read more: Hiltzik: Trump and Vance are dead wrong — economists unanimously agree that U.S. tariffs are a tax on American consumers Trump's tariff orders betray the same inattention to detail. They make no economic sense even on their own terms. They're based on a fundamental misunderstanding of who pays the tariffs — they're not paid by exporters or foreign regimes, as Trump maintains, but by consumers, making them a tax on Americans. They won't achieve their stated goal of bringing manufacturing back to these shores. Trump's hair-trigger reversals, moreover, undermine any effect they might have had. That's especially the case with the latest chickening-out — the European Union tariffs that lasted all of two weekend days — a period that Justin Wolfers, the witty economic commentator from the University of Michigan, calculated as "18% of a Scaramucci," a jocular metric based on the 11-day reign of Anthony Scaramucci as Trump's communications director in his first term. All this underscores the utility of the TACO trade, as long as one has the emotional strength to stand pat during a Trump-inspired maelstrom. But it doesn't mean that after the round trip of tariffs-on-tariffs-off the economy is back to where it might otherwise have been or that they're otherwise unimportant. With confidence in U.S. economic growth shaken and an international trade system that has lasted since World War II — and that advantaged the U.S. more than any other country on Earth — thrown into upheaval for no detectable rational reason, there's no telling about the long-term ramifications of Trump's trade war. All it means is that in the near term at least, the way to bet is that Trump will, indeed, chicken out. As he has been doing since Inauguration Day. Get the latest from Michael HiltzikCommentary on economics and more from a Pulitzer Prize me up. This story originally appeared in Los Angeles Times. Sign in to access your portfolio
Bloomberg
3 days ago
- Business
- Bloomberg
Trump Blasts TACO Trade That's Winning Over Markets
Financial markets love a good acronym, and on Wednesday Donald Trump was asked to respond to the latest. The so-called TACO trade — which stands for Trump Always Chickens Out — was coined by a Financial Times columnist to describe the practice whereby investors seize on market tumbles after the president makes tariff threats, predicting he will ultimately relent and equities will rebound.
