The stock market is under pressure due to concerns about a looming recession and the ripple effects of President Trump’s reciprocal tariffs. This environment, however, has created opportunities, particularly in fundamentally strong stocks whose prices have seen pullbacks. The recent dip in some of these stocks has reduced concerns about high valuations, making them more attractive for long-term investment. With $2,000 to invest, I wouldn’t hesitate to buy shares of these companies on dips.
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Nvidia stock
Nvidia (NASDAQ:NVDA), one of the biggest beneficiaries of the artificial intelligence (AI) boom, hasn’t been immune to the broader market sell-off. The chipmaker’s stock has taken a hit, dropping nearly 30% so far this year amid concerns about an economic slowdown and its impact on AI infrastructure spending. Adding to the pressure, shrinking margins and the emergence of lower-cost AI alternatives like DeepSeek have weighed on investor sentiment.
Despite this sharp pullback, Nvidia remains the dominant player in the AI space. The technology giant will continue to benefit from higher demand for its high-performance chips, especially in the data centre segment. In fiscal 2025 (FY25), Nvidia’s data centre revenue more than doubled. This growth was led by solid demand for its Hopper platform.
Looking ahead, Nvidia’s next-generation Blackwell chips are off to a strong start and will support future growth. These chips alone brought in $11 billion in revenue during the fourth quarter of FY25. Management expects this momentum to continue, forecasting a sequential increase in its data centre business in Q1 of FY26, with strong contributions from compute and networking.
On the profitability front, Nvidia’s margins are under pressure. However, its bottom line is growing rapidly. Even with margin headwinds, Nvidia’s earnings per share (EPS) jumped about 130% year-over-year in FY25. Moreover, its EPS will likely sustain high double-digit growth in FY26, led by the leverage from higher sales.
As the momentum in Nvidia’s business will likely sustain, the recent dip in its price has made it attractive. Nvidia is trading at a next 12-month (NTM) price-to-earnings (P/E) ratio of 20.8. That’s a compelling level considering its solid growth trajectory, leadership in AI, and strong fundamentals.
Costco stock
Costco (NASDAQ:COST) stock has slipped about 15% from its 52-week high. But even after the pullback, the stock isn’t exactly cheap. COST stock trades at an NTM price-to-earnings (P/E) ratio of 48.3, well above the valuation of peers like Walmart. While Costco’s higher valuation has long been supported by its ability to consistently deliver strong same-store sales growth and outpace competitors, the current valuation is unattractive, considering the macro headwinds.
The retailer’s fundamentals remain impressive. Its value-driven pricing model and strong membership retention continue to give Costco a competitive edge, even in a tough retail environment. But like all companies, Costco isn’t completely insulated from broader economic pressures. With about a third of its U.S. merchandise imported and nearly half of that coming from China, Mexico, and Canada, tariffs could squeeze its margins. Predicting the exact impact is difficult, but it’s fair to assume these macro headwinds will bring some pressure and weigh on its price.
Costco’s scale and operational efficiency allow it to manage costs well. Moreover, its loyal customer base and track record of offering value are key advantages that help drive its financials and cushion short-term blows. Looking ahead, its long-term growth prospects remain solid. Thus, any dip in its stock price offers a compelling opportunity to buy.
