Tech Sell-Off Creates Buying Opportunities
Just weeks after the Nasdaq Composite reached near-record highs, the tech-heavy index has entered a correction phase, marked by a 10%+ decline. Investors are reacting to several macroeconomic concerns, including President Trump’s trade policies, weakening consumer confidence, and stretched stock valuations. Additionally, fears of an impending recession have caused uncertainty in the market.
While stock market corrections can be unsettling, they also present excellent buying opportunities. Growth stocks with strong fundamentals often see price drops as investors rush to lock in profits and reduce exposure. For savvy investors, this downturn offers a chance to pick up quality stocks at discounted prices.
Two stocks that stand out as attractive buys during this market correction are Axon Enterprise (AXON) and Taiwan Semiconductor Manufacturing Company (TSMC). Let’s explore why these companies remain promising despite the current market volatility.
1. Axon Enterprise (AXON)
A Market Leader in Law Enforcement Technology
Axon Enterprise (AXON 0.26%) has been a top-performing stock in the S&P 500, gaining 130% last year. Over the past decade, Axon has delivered consistent growth, making it one of the best-performing stocks in the sector.
The company specializes in law enforcement technology, offering a range of products including:
- Taser conductive electrical weapons (CEWs)
- Body-worn and dashboard cameras
- Cloud-based software for evidence and record management
- Artificial Intelligence (AI) solutions for law enforcement
One of Axon’s most innovative AI tools is Draft One, which uses generative AI to create first drafts of police reports based on body cam and dash cam footage. This tool has received positive feedback from law enforcement agencies as it significantly reduces paperwork and increases efficiency.
Stock Pullback Creates Buying Opportunity
Axon’s stock experienced a sharp decline in mid-February after the company dissolved its partnership with Flock Safety due to a contract dispute. However, during the Q4 earnings call on February 25, Axon’s management expressed optimism about renegotiating the agreement under new terms.
Despite the sell-off, Axon remains a strong long-term investment. The company’s financial outlook is robust, with management projecting 25% revenue growth in 2025, reaching $2.55 billion to $2.65 billion.
Why Axon is a Strong Buy
- Resilient customer base: Axon primarily serves state and local law enforcement agencies, which are less sensitive to economic downturns compared to private-sector clients.
- Government support: The Trump administration’s emphasis on public safety and immigration enforcement could further benefit Axon.
- Integrated ecosystem: Axon’s combination of hardware and software solutions creates strong competitive advantages and customer loyalty.
At 25% below its all-time high, Axon stock presents an attractive entry point for long-term investors.
2. Taiwan Semiconductor Manufacturing Company (TSMC)
The Backbone of the Global Semiconductor Industry
Taiwan Semiconductor Manufacturing Company (TSM -0.56%), commonly known as TSMC, is the world’s largest third-party semiconductor manufacturer. The company plays a crucial role in the tech industry, producing chips for major corporations, including:
- Apple (AAPL)
- Nvidia (NVDA)
- Broadcom (AVGO)
- Advanced Micro Devices (AMD)
TSMC’s AI-Driven Growth
While semiconductor stocks are cyclical, TSMC’s dominance in AI chip production has provided strong long-term tailwinds. The AI boom has increased demand for advanced chips, with TSMC leading the industry in manufacturing cutting-edge processors for AI applications.
Strong Financial Performance
In Q4 2024, TSMC reported outstanding results:
- Revenue: $26.9 billion (39% YoY growth)
- Operating Margin: 49%
- Market Leadership: TSMC’s advanced manufacturing technology outpaces competitors like Intel and Samsung
With chip demand expected to grow due to advancements in AI, cloud computing, and automation, TSMC is well-positioned for long-term success.
Why TSMC is a Strong Buy
- Industry leader in AI chip manufacturing
- Expanding market share amid rising AI and cloud computing demand
- Strong financials with high revenue growth and profitability
- Strategic partnerships with major tech companies
TSMC stock trades in line with the tech sector, making it an attractive buy during market corrections. Investors looking for a long-term AI-driven growth opportunity should consider adding TSMC to their portfolios.
Buy the Dip on These Tech Stocks
Market corrections can be unsettling, but they also create rare opportunities to buy top-performing stocks at discounted prices. Both Axon Enterprise and Taiwan Semiconductor Manufacturing Company have strong fundamentals, robust growth prospects, and industry-leading positions.
As the market remains volatile, investors should focus on companies with strong revenue growth, innovative technologies, and solid customer bases. Axon’s leadership in law enforcement technology and TSMC’s dominance in AI chip manufacturing make them two of the best stocks to buy during this correction.
For those looking to capitalize on the tech sell-off, these two stocks present compelling investment opportunities in 2025.
