3 Tech Stocks I'm Buying if the Nasdaq Enters a Correction

Feb. 27 was a brutal day for tech stocks.

Nvidia topped estimates in its fourth-quarter earnings report, but the results weren't quite enough to overcome broader fears about a slowdown in the AI sector or weakening consumer demand due to issues like tariffs, government budget cuts, and inflation.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

By the end of the session, Nvidia was down 8.5%, and the Nasdaq Composite had lost 2.8%, closing at 18,544.42, the lowest it's been since the day before the election nearly four months ago.

At that level, the Nasdaq is down more than 8% from its peak closing value of 20,173.89 on Dec. 16, meaning that the index is on the verge of a correction, typically defined as a drop of 10% or more from a recent closing peak. That means it's a good time to put together a watchlist of stocks to buy on the dip if the index continues to fall. Here are three on my list.

Image source: Getty Images.

1. MercadoLibre

Market sell-offs are great opportunities to buy proven winners at a discount and if there's one company that's shown it can grow in any kind of market environment, it's MercadoLibre (NASDAQ: MELI).

When nearly every other e-commerce company saw its sales growth shrivel after the pandemic, MercadoLibre continued to deliver blockbuster results, and it's still doing so today. In the fourth quarter, revenue jumped 37% to $6.1 billion, or 96% on a currency-neutral basis, and operating income was $820 million, equal to a margin of 13.5%.

MercadoLibre benefits from large growth opportunities as e-commerce and fintech are still relatively underpenetrated in Latin America. Additionally, the company has built a unique and comprehensive business model that gives it a number of different ways to grow, including through e-commerce, both first-party and marketplace sales, and its fintech platform, which include payments, POS systems at brick-and-mortar retailers, and credit cards.

The company also has a fast-growing advertising business built on the success of its e-commerce platform, and its MELI+ subscription program, which is similar to Amazon Prime.

MercadoLibre has a long track record of delivering superior results and a little market volatility won't throw it off track.

2. Axon Enterprise

Axon Enterprise (NASDAQ: AXON) is a tech company, but it isn't subject to the same trends in enterprise demand that most of its software peers are.

Axon, which makes Taser conductive electrical weapons, body cameras, and sells software to go with it, focuses on law enforcement tech, which means it's not as sensitive to the economic cycle as the typical software-as-a-service (SaaS) company is.

The company is coming off another impressive year with revenue up 33% and margins expanding. It's tapping into a wide range of new technologies, including drones for a program it calls drone first responder (DFR) and generative AI for a new tool called Draft One, which takes footage from body cameras and generates first drafts of police reports.

Axon has a lot more innovation to come in both those areas and beyond, and the company's customer base is also expanding beyond law enforcement to the enterprise as it signed its biggest contract ever last year, with a global logistics firm, showing there's a sizable market for body cameras for private businesses.

Meanwhile, Axon should also be insulated from budget cuts at the federal level as its technology tends to help its customers become more efficient and save money.

Axon is down nearly 30% from its peak on concerns about the end of a partnership. The stock is still pricey, according to traditional metrics, but the business is strong enough to overcome the noise in the economy. It's a smart stock to buy on the dip.

3. Upstart

Finally, AI-based lending platform Upstart (NASDAQ: UPST) also looks like a good stock to buy on the dip.

Upstart has been on a roller coaster since its IPO in 2020, initially soaring during the pandemic before collapsing in the aftermath as interest rates spiked.

However, Upstart has reinvented its business since then, and it's delivering significantly improved results even in a challenging environment for lenders. The company introduced Model 18, a new AI-based model that has significantly improved its loan screening and acceptance rate, showing a technological advantage over its peers and the capability of growing in a challenging interest rate environment.

Revenue in the fourth quarter was up 56% to $219 million as its conversion rate improved from 11.6% to 19.3%. The company nearly broke even on a generally accepted accounting principle (GAAP) basis, and it expects to be GAAP profitable in 2025.

A market correction would make Upstart stock cheaper, but that shouldn't be confused for meaningful headwinds on the business. The stock looks like it's poised for a strong 2025.

Should you invest $1,000 in Axon Enterprise right now?

Before you buy stock in Axon Enterprise, 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 Axon Enterprise wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $765,576!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. 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 February 28, 2025

Jeremy Bowman has positions in Axon Enterprise, MercadoLibre, Nvidia, and Upstart. The Motley Fool has positions in and recommends Axon Enterprise, MercadoLibre, Nvidia, and Upstart. The Motley Fool has a disclosure policy.