Adam Spatacco, The Motley Fool

Sun, Jun 1, 2025, 11:00 AM6 min read

• 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.