The technology industry is abundant with innovators offering promising long-term opportunities for investors. Consequently, investing in tech leaders when their stock prices decline can be advantageous.
Shares of Advanced Micro Devices (AMD -0.25%) and Micron Technology (MU -1.42%) are currently trading at significant discounts, even as they see strong demand for their data center products.
1. Advanced Micro Devices
The stock of Advanced Micro Devices has decreased by 47% from its recent peak. However, following the company’s first-quarter earnings report, shares experienced a surge. Despite the uncertainty created by tariffs, AMD impressed investors with its fourth consecutive quarter of accelerating growth, driven by demand for its data center and AI chips.
Although revenue and earnings saw slight decreases sequentially over the last quarter, demand remains significantly elevated compared to last year. Revenue for Q1 soared 36% year over year to $7.4 billion, with adjusted earnings climbing by 55%.
Post-report, one factor contributing to the stock’s rise was AMD’s optimistic outlook for its embedded chip business serving industrial markets. Although this segment has faced revenue declines over the past year, management anticipates a return to growth by the second half of 2025. Moreover, strong demand for AMD’s new Radeon 9070 series graphics chips resulted in a 28% year-over-year revenue increase in its gaming sector. If both segments continue to grow later this year, AMD’s stock could see further gains.
2. Micron Technology
The escalating demand for AI chips also positively impacts the need for storage and memory products to relay vast amounts of data in data centers. Micron Technology is a frontrunner in manufacturing these products, but uncertainty over immediate demand trends has dropped the stock by 37% from its recent highs.
Operating in a highly cyclical industry, Micron produces memory and solid-state storage products for both consumer and data center markets. Over the past 15 years, its revenue has generally trended upward and remains near record highs due to booming data center demand. Recently, revenue increased by 38% year over year, and management expects record revenue in the upcoming fiscal third quarter, driven primarily by the data center sector.
Investors should note that Micron may carry higher risks compared to AMD. While AMD has exhibited more consistent annual revenue growth, Micron’s revenues over the past five years have fluctuated significantly. Nevertheless, increasing needs for memory and storage in data centers positions Micron well for long-term growth, despite potential volatility in the competitive market. Analysts foresee revenues climbing to $45 billion within the next two years, with earnings per share estimated at $11.12, pointing to a forward P/E ratio below 10, suggesting potential for significant stock appreciation.
