The Nasdaq Just Hit Correction Territory: 2 Brilliant AI Stocks to Buy Now and Hold Forever

Warren Buffett has often endorsed a contrarian investment strategy. "Tumbling markets can be helpful to the true investor if he has cash available when prices get far out of line with values. A climate of fear is your friend when investing; a euphoric world is your enemy," he wrote in his 2013 letter to shareholders.

Uncertainty surrounding the Trump administration's trade policies has caused the technology-focused Nasdaq Composite (NASDAQINDEX: ^IXIC) to fall more than 10% from its recent high. That puts the index in correction territory. Investors should follow Buffett's advice and treat the drawdown as a buying opportunity.

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Here's why Nvidia (NASDAQ: NVDA) and Amazon (NASDAQ: AMZN) are worth owning forever.

1. Nvidia

Semiconductor company Nvidia reported excellent financial results in the fourth quarter. Revenue increased 78% to $39 billion on strong growth in the data center segment driven by demand artificial intelligence (AI) hardware. Non-GAAP net income increase 71% to $0.89 per dilute share. The only blemish was a 3-point decline in gross margin, but CFO Colette Kress says that figure will rebound as Blackwell sales ramp this year.

DeepSeek shook investor confidence in Nvidia earlier this year when it reportedly trained a sophisticated large language model with much less money (and less powerful chips) than U.S. rivals like Anthropic and OpenAI. But worries about a decline in AI infrastructure spending have so been unfounded. DeepSeek's efficient training methods may even boost demand for Nvidia chips by making AI affordable for more companies.

What makes Nvidia a compelling forever-investment is the durability of the AI boom. While generative AI is currently the focal point, physical AI promises to gradually steal the spotlight in the years ahead. Physical AI is the technology that will let autonomous machines like cars and robots understand and interact with the physical world. Nvidia is well positioned to be a winner in those markets.

Nvidia GPUs are the most coveted AI accelerators on the market, and its dominance is due to a combination of better hardware and a more extensive software ecosystem. Most AI projects rely on Nvidia's CUDA platform, which includes tools that help programmers write applications for autonomous cars and robots. That should keep the chipmaker at the forefront of the AI revolution for many years.

As a caveat, Nvidia stock has declined nearly 30% from its high and it may continue falling in the coming weeks. But shares look attractive right now. Nvidia current trades at 24 times forward earnings, the cheapest valuation multiple in the past 12 months. Patient investors should feel comfortable buying a position today. But keep cash in reserve to capitalize on further declines.

2. Amazon

Amazon reported encouraging fourth-quarter financial results that beat expectations on the top and bottom lines, but missed revenue estimates in the advertising segment. Total revenue increased 10% to $187 billion, operating margin expanded more than 3 percentage points, and GAAP net income increased 86% to $1.00 per diluted share.

Amazon is a compelling forever investment because of its strong presence in three growing industries. It runs the largest online marketplace outside of China and is on pace to be the world's largest retailer in 2025. Strength in retail has led to a booming advertising business; Amazon is the third largest ad tech company worldwide. And Amazon Web Services (AWS) is the largest public cloud in terms of revenue and customers.

Morgan Stanley analysts see Amazon as an underappreciated generative AI leader in retail and cloud services. They expect the company to "capture a larger portion of consumer wallets and see its operational advantage to deliver more items faster and more profitably than peers widening." Likewise, AWS as the largest public cloud is ideally positioned to capitalize on demand for generative AI infrastructure services.

Amazon stock has fallen 20% from its high, but remains a top pick at Morgan Stanley. Wall Street anticipates adjusted earnings will grow 14% in 2025. That makes the current valuation of 35 times adjusted earnings look relatively expensive. But Amazon topped the consensus estimate by an average of 29% in the last six quarters. If that pattern continues, and I think it will, the current valuation would be cheap in hindsight.

Should you invest $1,000 in Nvidia right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.