John Ballard, The Motley Fool

Sat, May 24, 2025, 8:17 AM5 min read

• AMD has seen mixed business results lately, but it's building momentum that could boost the stock.

• Micron Technology operates in a cyclical industry, but it's on track for record revenue this year.

• 10 stocks we like better than Advanced Micro Devices ›

The technology sector is full of innovators that offer promising long-term prospects for investors, and that's why it can be beneficial to invest in tech leaders when their share prices are down.

Shares of Advanced Micro Devices (NASDAQ: AMD) and Micron Technology (NASDAQ: MU) are trading at steep discounts, while these companies are experiencing strong demand for their data center products.

Is it time to buy these two beaten-down tech stocks?

Advanced Micro Devices' stock has fallen 47% from its previous peak, but the shares got a boost after the company's first-quarter earnings report in May. Despite tariffs creating a lot of uncertainty for businesses, AMD surprised investors by reporting its fourth consecutive quarter of accelerating growth, led by demand for its data center and AI chips.

While revenue and earnings fell sequentially over the fourth quarter, demand remains significantly elevated over last year. For Q1, revenue surged 36% year over year to $7.4 billion, with adjusted earnings up 55%.

One factor sending the stock higher after the report was AMD's positive outlook for its embedded chip business, which includes sales to industrial markets. This segment posted revenue declines over the past year, but management is now guiding for a return to growth in the second half of 2025.

Additionally, strong demand for AMD's new Radeon 9070 series graphics chips drove a revenue increase in the gaming segment of 28% year over year in the quarter. If both the embedded and gaming segments are growing later this year, AMD stock could potentially climb higher.

The stock is trading at a forward price-to-earnings (P/E) ratio of 29, which looks attractive for a company with a history of delivering strong growth. But one factor weighing on the stock price is chip export restrictions to China, which AMD expects to reduce its full-year revenue by $1.5 billion.

However, management sees the stock as undervalued based on its long-term prospects. It recently announced a $6 billion share repurchase program, bringing its total share repurchase authorization to $10 billion. CEO Lisa Su said: "Our expanded share repurchase program reflects the Board's confidence in AMD's strategic direction, growth prospects, and ability to consistently generate strong free cash flow."