Volatility has returned to the stock market. In particular, the tech-heavy Nasdaq Composite has suffered a rough start to the year. As of this writing, the index has dropped about 3.8% year to date and about 7.5% off its all-time high. That means the index is approaching a technical correction — a drawdown of 10% from recent highs. So, given the state of play, are there any bargains to be found in the Nasdaq? Today, three Motley Fool contributors will make the case for their favorite bargain bin buys on the Nasdaq: Advanced Micro Devices (AMD 1.48%), Broadcom (AVGO 8.64%), and Amazon (AMZN -0.72%).

Don’t miss the massive discount on this high-flying AI stock

Will Healy (Advanced Micro Devices): AMD has struggled over the last year. A prolonged slump in its gaming and embedded segments and a company forecast that it would experience a sequential decline in revenue have led to a 55% pullback in the semiconductor stock’s price since it peaked one year ago. However, that drop in the stock appears overdone for many reasons. Regarding its data center segment, that part of the business often suffers from the effects of seasonal sales patterns, and a quarter-over-quarter decline in Q1 of last year seems to confirm this trend. Additionally, DeepSeek’s breakthrough has also allowed entities to run artificial intelligence (AI) models at much lower costs. Hence, even if AMD cannot catch up to market leader Nvidia, its lower-end AI accelerators could benefit from increased demand. Indeed, AMD’s overall growth rate has increased in recent quarters, not fallen back. Revenue in the fourth quarter of 2024 grew 24% to $7.7 billion. As recently as Q2, yearly revenue growth was just 9%. This is likely because the slump in its embedded segment may finally be ending. Yearly revenue growth fell by 41% yearly in Q2. Fast forward to Q4, and the decline was now just 13% annually.

Growing money supply usually bodes well for these companies to outperform. If you’ve invested in the stock market over the last couple of years, you may have benefited from an incredible bull run in the S&P 500 (^GSPC 0.55%). The index climbed over 66% from the market bottom in October 2022 through the end of February this year. But not every stock participated equally in that bull run. If you invested exclusively in large-cap stocks with growth fueled by artificial intelligence spending, you likely outperformed the index. If you invested in anything else, you probably didn’t keep up. Just 27% of S&P 500 constituents outperformed the index in 2023, and 28% outperformed in 2024. That’s led to an increasingly concentrated market dominated by just a handful of names. But rising concentration is unsustainable. At some point, the mega-cap stocks that have led the market over the last two-plus years will start lagging as smaller companies pick up the slack. And one market indicator suggests that change could be right around the corner.

U.S. money supply growth is accelerating

One factor that’s given the biggest companies in the stock market an unfair advantage in recent years has been the tightening money supply. U.S. M2 money supply started declining in 2022, finally reaching a bottom in late 2023. M2 money supply is a measure of all the cash people have on hand, all the money deposited in checking and savings accounts, and other short-term investments like small-value certificates of deposit (CDs) maturing within a year. The Federal Reserve can influence the money supply through changes in borrowing rates as it works to maintain price stability. A smaller M2 money supply indicates rising interest rates, making it harder to finance loans, and consumers may be less willing to spend. In January, M2 money supply grew faster than at any point since August of 2022, up 3.86% year over year. The growth has accelerated nearly every month since turning positive 10 months ago. At this point, we’ve nearly returned to the peak money supply from 2021. US M2 Money Supply YoY data by YCharts. Despite significant economic uncertainty leading to much more caution at the Federal Reserve, investors still expect the Fed to lower borrowing rates further in 2025. As of this writing, futures markets indicate a 79% chance that the Fed makes two to four rate cuts by the end of the year. That should lead to further money supply growth beyond 2025.

How to invest as money supply growth accelerates

While the money supply is tight, mega-cap stocks with tons of cash on their balance sheets stand at a huge advantage. They have the money available to invest in growth and improve their technologies. The tightening money supply happened to coincide with a major breakthrough in artificial intelligence (AI) in late 2022, which required massive amounts of capital to take advantage of. This enabled the world’s largest companies to spend heavily on AI, leaving smaller companies with far less capital. However, accelerating growth in the money supply is historically correlated with broadening stock performance. As smaller companies have easier and less expensive access to capital, they can invest more in their own growth initiatives. That leads to stronger returns investors typically expect from smaller companies in normal economic environments and more S&P 500 constituents outperforming the overall index. One of the easiest ways to invest in that trend reversal is to buy an equal-weight index fund like the Invesco S&P 500 Equal Weight ETF. The equal-weight index balances every component of the S&P 500 equally. This means the amount you’ll invest in the biggest mega-cap stocks is the same as the smallest members of the index. Each quarter, the index’s managers rebalance it, and new constituents are added, while others leave. The Invesco fund managers do an excellent job of tracking the index and ensuring that the necessary trades to keep the fund balanced don’t trigger any capital gains for shareholders. That makes it extremely efficient for long-term buy-and-hold investors. Other funds for investors to consider include small-cap and mid-cap stocks. These smaller companies have trailed the large-cap index for a long time, predating the Fed’s tightening policy over the last few years. However, they now trade at great values relative to the S&P 500. The mid-cap S&P 400 index sports a forward price-to-earnings (P/E) ratio of 15.6, while the small-cap S&P 600 trades for just 15.3 times earnings. That’s a bargain compared to the S&P 500’s 21.5 multiple or the equal-weight index’s 17.1 multiple. Investors could buy the Vanguard Extended Market ETF (VXF 0.26%), which tracks an index of stocks, including almost every U.S. company outside the S&P 500. Alternatively, a focus on the S&P 600 small-cap index, specifically with the SPDR Portfolio S&P 600 Small Cap ETF (SPSM 0.57%), could perform well as money supply continues to accelerate. With money supply growth accelerating and valuations favoring smaller companies, all of the above options present great ways to diversify away from the largest companies in the S&P 500.

The U.S. stock market has stumbled in recent weeks as the Trump administration imposed tariffs on goods imported from Canada, China, and Mexico, potentially starting a trade war. The market has been especially volatile because the White House has wavered on its trade policy, first imposing duties and then delaying or changing the terms. The market dislikes uncertainty. The three major U.S. stock indexes are down more than 5% from their highs as of March 6: The S&P 500 (^GSPC 0.55%) has slipped 6.6%, the Dow Jones Industrial Average (^DJI 0.52%) has declined 5.4%, and the Nasdaq Composite (^IXIC 0.70%) has tumbled 10.4%. Importantly, the Nasdaq has officially entered market correction territory, meaning it has fallen at least 10% from its most recent bull market high. Fortunately, the index has historically bounced back very quickly. While there are no guarantees, here’s what usually happens next.

The Nasdaq Composite has historically rebounded quickly after closing in correction territory

The Nasdaq Composite measures the performance of more than 3,000 companies listed on the Nasdaq stock exchange. The index is most heavily weighted toward the information technology and consumer discretionary sectors, and is commonly regarded as a benchmark for growth stocks. As mentioned, the Nasdaq on March 6 closed more than 10% below its most recent bull market high of 20,174, a level the index reached less than three months earlier on Dec. 16. That means the Nasdaq has entered a stock market correction, something it has done a dozen other times since 2010. The chart below lists each date since 2010 when the Nasdaq first closed in correction territory. It also shows how the index performed over the next 12 months.

Nasdaq Closes in Correction Territory	12-Month Return
May 7, 2010	25%
Aug. 4, 2011	16%
May 18, 2012	26%
Nov. 14, 2012	40%
Aug. 24, 2015	15%
Oct. 24, 2018	15%
June 3, 2019	32%
Feb. 27, 2020	54%
Sept. 8, 2020	41%
March 8, 2021	2%
Jan. 19, 2022	(24%)
Aug. 2, 2024*	8%
Average	21%

Since 2010, the Nasdaq has returned an average of 21% during the 12-month period following its first close in correction territory. Comparatively, the index has returned 15% annually over the entire period. That means the Nasdaq has historically produced above average returns following its first close in a market correction. Importantly, past performance is no guarantee of future results. But we can use the information above to make an educated guess about how the Nasdaq might perform in the next year. Specifically, the index closed at 18,069 on March 6, so it would advance 21% to 21,863 in the next year if its performance aligns with the historical average.

The Nasdaq Composite may continue to fall due to uncertainty about trade policy

The tariffs proposed by the Trump administration as of Feb. 27 would increase the average tax on U.S. imports to 13.8%, according to one estimate, the highest level since 1939. Several duties have already taken effect, rattling the stock market. Businesses can either absorb the cost increases or pass them to buyers. Margins fall in the first scenario, and sales likely fall in the second scenario. Either way, tariffs probably hurt corporate earnings. However, investors are particularly nervous because the Trump administration has waffled back and forth on its trade policy. It planned to impose tariffs on goods from China, Canada, and Mexico on Feb. 4, but delayed duties on Canadian and Mexican imports until March 4. The administration then adjusted the terms on March 6, such that goods in compliance with the free trade agreement are exempt until April 2. That whipsawing on trade policy has created uncertainty, and the stock market will likely remain volatile until that uncertainty dissipates. But investors can take solace in this indisputable fact: The Nasdaq Composite has recovered from every correction and there is no reason to believe this one will be different. That means the current drawdown is a buying opportunity.

Seven & i Holdings, the parent of 7-Eleven, said Thursday it will replace CEO Ryuichi Isaka with lead independent outside director Stephen Dacus, making a foreigner the top executive for the first time, according to domestic media. Dacus will take charge from Isaka on May 27, according to a company filing. Seven & i said that Isaka will remain as senior adviser to the company. Dacus was the head of the company’s special committee that is evaluating a $47-billion takeover bid from Canada’s Alimentation Couche-Tard. He was announced to have stepped down from the committee on March 5, and independent outside director Paul Yonamine replaced him. The convenience store operator also announced a share buyback of 2 trillion yen ($13.2 billion) and plans to list its North American subsidiary, 7-Eleven Inc. The company said that it will hold a majority stake in the subsidiary which will be listed in the second half of 2026. Shares of Seven & i ended the day up 6.11%, as reports about the impending changes emerged on Thursday. Seven & i also provided an update on the takeover bid by Canada’s Couche-Tard, saying that the special committee formed to review the proposal “has been committed to exploring all value creation opportunities, including active and constructive engagement with ACT and will continue to do so.” It said a consistent hurdle that the Couche-Tard proposal needed to resolve is addressing “the serious U.S. antitrust challenges that any transaction would face.” Speaking at a press conference Thursday, Isaka said “there has been no meaningful progress on finding a solution of the U.S. antitrust challenges” regarding the Couche-Tard bid, according to a Reuters translation. Dacus then added that he doesn’t know “if Couche-Tard can improve our company value,” adding that there was a “very high regulatory hurdle”, particularly in the U.S. However, the company revealed it has been working with Couche-Tard to put together a “potential divestiture package” that could operate effectively and assure competition between Couche-Tard and the buyer of the divested stores, even after a transaction. The $47-billion bid by Couche-Tard is the only active bid for Seven and i, after a management buyout attempt by the founding family failed to secure the financing needed to take over the convenience store operator last week.

Sale of business units

Other actions the company also announced are that it will sell its superstore business group — consisting of supermarkets — to investment company Bain Capital for 814.7 billion yen ($5.37 billion), with the transaction expected to be completed in September 2025. Bain Capital then plans to list Seven & i’s supermarket business in about three years after boosting synergies within the group, according to a Reuters report. Seven & i also plans to reduce its stake of banking services arm Seven Bank by selling down its stake to below 40%. Seven Bank will also then be deconsolidated from the company’s balance sheet. Seven & i said the share buyback will be funded by proceeds from the sale of its superstore business group and the IPO of 7-Eleven Inc. These buybacks will commence when the sale is completed, and are expected to conclude by the company’s 2030 financial year. A dividend policy will also be implemented, the company said, adding that “it will continue to maintain or increase per share dividend amount over time for cashflow generated from ordinary business operation.”