Should You Buy These Beaten-Down Tech Stocks?

Advanced Micro Devices (AMD) and Micron Technology (MU) are highlighted as potentially attractive tech investments due to strong demand for their data center products despite recent stock declines; AMD's Q1 revenue surged 36% year-over-year, driven by data center and AI chip demand, with a positive outlook despite export restrictions to China, while Micron is benefiting from surging demand for memory and storage in data centers, expecting record revenue next quarter, although its revenue stream has been historically volatile. Both companies are seen as undervalued given long-term growth prospects in AI and cloud computing.

Analysis

Advanced Micro Devices (AMD) and Micron Technology (MU) are presented as technology stocks with promising long-term prospects, currently trading at significant discounts from their peaks—47% for AMD and 37% for Micron—while experiencing strong demand for their data center products. AMD demonstrated robust performance in its first quarter, with revenue increasing 36% year-over-year to $7.4 billion and adjusted earnings up 55%, driven by data center, AI, and gaming segments; the gaming segment itself saw a 28% YoY revenue rise. Despite a sequential dip from Q4, AMD projects a return to growth in its embedded chip business in the second half of 2025 and has authorized a total of $10 billion for share repurchases, signaling management confidence, although chip export restrictions to China are anticipated to reduce full-year revenue by $1.5 billion. AMD's forward P/E ratio stands at 29. Micron Technology is also benefiting from the AI-driven demand for memory and storage, reporting 38% YoY revenue growth in its most recent quarter and anticipating record fiscal third-quarter revenue. However, Micron operates in a highly cyclical and competitive industry, leading to historically volatile annual revenue, contrasting with AMD's more consistent growth. Despite this volatility, Micron's innovation is expected to drive long-term demand, with analysts forecasting revenue reaching $45 billion and earnings of $11.12 in the next two years, translating to a forward P/E of less than 10.

Key Decisions for Investors

• Investors considering Advanced Micro Devices should weigh its strong Q1 performance, including 36% year-over-year revenue growth and positive outlook in key segments like data center and AI, against the material $1.5 billion revenue headwind from China export restrictions and its current forward P/E of 29.
• For Micron Technology, the attractive forward P/E of less than 10 and expected record quarterly revenues driven by data center demand present a potential value case, though this must be balanced with the company's significant exposure to industry cyclicality and competitive pricing pressures.
• Given both companies are positioned to benefit from secular growth in AI and data centers and are trading well below their recent highs, investors might explore these as potential long-term holdings, while closely monitoring AMD's navigation of geopolitical challenges and Micron's execution within its volatile market.