Nasdaq Rally: My 3 Favorite Stocks to Buy Now

The three major benchmarks soared on Monday as the U.S. announced an initial import tariff agreement with China. This was a game-changing moment for investors as concerns about President Donald Trump's tariff plan had weighed on sentiment for weeks.

Investors were particularly worried about an escalating trade war with China that could wreak havoc on the economy. But that worst-case scenario seems to be drifting away. This week, the U.S. agreed to set tariffs at 30% on China, a level light-years away from the 145% announced last month.

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All of this was particularly good news for technology stocks and growth stocks, in general, because many tech stocks rely on China as a source of production and parts for their products. (The U.S. exempted electronics products from tariffs, but that move was said to be temporary.)

Growth companies rely on a strong economic environment to progress. It's no surprise, therefore, that the growth and tech-heavy Nasdaq Composite (NASDAQINDEX: ^IXIC) rallied, gaining 4.4% in one trading session on this U.S.-China news.

Which stocks may benefit from this newfound momentum? Here are my three favorites to buy now in the Nasdaq rally.

Image source: Getty Images.

1. Apple

As I mentioned, tech stocks haven't yet faced Trump's tariffs on their imported electronics products, due to the exemption. But the president has said this situation is temporary, which is exactly why it's important to see lower general tariff levels on a major trading partner like China. It suggests that if and when the U.S. sets a tariff for electronics, the level should be manageable.

Apple (NASDAQ: AAPL) is a company that's particularly concerned by this. The tech giant has made moves in recent years to expand the production of its products to countries including India and Vietnam. Earlier this month, the company said it would shift most of its iPhone production for the U.S. to those countries. This doesn't completely eliminate the tariff impact, though, as some imports from China will continue -- and other countries face import tariffs, too.

Still, this week's trade agreement should lift some of the pressure on Apple stock and allow investors to focus on the quality of this smartphone leader. The company has delivered a long track record of earnings growth to investors and has shown it has a solid brand moat or competitive advantage -- iPhone or Mac users don't often abandon those products for rivals.

This installed base is helping Apple's services revenue soar to records, a trend that could have much farther to go. Right now, Apple looks like a buy as it trades for 29x forward earnings estimates.

AAPL PE Ratio (Forward) data by YCharts.

2. Alphabet

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) also is a leader in its field, and this leadership has helped it generate billion-dollar earnings year after year. The company owns Google Search, a search engine that consistently holds 90% share of the global market. As a result, businesses rush to Google with their advertising budgets in order to reach potential customers.

Though Alphabet makes most of its revenue through this advertising, it's also earning significant revenue through its cloud business, Google Cloud. This business is among market leaders and is registering double-digit growth quarter after quarter. In the most recent period, Google Cloud revenue climbed 28% to more than $12 billion.

On top of this, Alphabet is heavily investing in artificial intelligence (AI) and is already benefiting from this in both of these businesses. AI has helped improve search results and improve the advertising experience for clients. It's also driving growth in the cloud business as demand for AI infrastructure and generative AI tools offered by Google Cloud increase.

For all of this, you don't have to pay top dollar. In fact, Alphabet stock trades for only 16x forward earnings estimates, making it the cheapest of the "Magnificent Seven" tech giants.

3. Nvidia

This list wouldn't be complete without Nvidia (NASDAQ: NVDA), the world's leading AI company. Tariff news weighed heavily on Nvidia stock since the company produces many of its products outside of the U.S. Though this AI giant announced a major move to invest in production at home, any relief from potential near-term tariff pressure is good news.

Why buy Nvidia now? Though the world's No. 1 AI chip designer already has announced spectacular revenue growth quarter after quarter, this growth story may be in its early days. The AI infrastructure buildout is ongoing, with Nvidia customers pledging to continue their heavy investments in AI.

In addition, Nvidia is well-positioned to benefit throughout the future stages of AI growth. This will occur as companies apply AI agents to solve real world problems at their businesses and as automaker customers use Nvidia technology to power self-driving capabilities.

Nvidia also has a few catalysts ahead, including Chief Executive Officer Jensen Huang's keynote at Computex at the start of next week and the company's earnings report on May 28. Any positive updates could push the shares higher -- especially since today, at 27x forward earnings estimates, they remain in bargain territory. Right now is a great time to get in on this famous AI player and hold on as the long-term growth story continues.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, and Nvidia. The Motley Fool has a disclosure policy.