With December ticking toward its end, 2024 is just about ready to fall off the calendar. It's been an absolutely wonderful performance stretch for the broader market, and hot tech companies including Nvidia, Palantir, and Apple have rocketed to new valuation highs.
But there are also some great technology stocks out there that are trading well below previous pricing heights, and investors could be doing themselves a disservice by overlooking these great companies.
If you're on the hunt for investments that can deliver big wins in 2025 and beyond, read on to see why two Fool.com contributors think these beaten-down stocks are great buys right now.
AMD is an undervalued AI stock play
Keith Noonan: Advanced Micro Devices (AMD 0.10%) is a designer of central processing units (CPUs) and GPUs for personal computers and data centers. The company's stock is up roughly 182% over the last five years thanks to some solid business execution and excitement that the company could be poised to see some of the same explosive, AI-driven growth that has propelled Nvidia to stellar returns.
On the other hand, AMD has seen a slower ramping for AI-related processors than some investors expected -- and the disconnect in the timeline has caused some significant valuation pullback for the stock. The chip specialist's share price is now down roughly 40% from the lifetime high that it hit earlier this year.
Despite a strong rally for the broader market, AMD stock has tumbled over the last few months -- and the company's share price has yet to recover from sell-offs triggered by its third-quarter earnings release at the end of October. AMD's revenue grew roughly 18% year over year to reach $6.8 billion in the period. Meanwhile, non-GAAP (adjusted) earnings per share rose 31% compared to the prior-year period.
While AMD will continue to have a strong market presence in processors for gaming and personal computers, it's the data center segment that has really become central to the stock's performance. Last quarter saw sales for the AI-related segment increase to $3.5 billion -- up 122% year over year and 25% on a sequential quarterly basis. The performance actually topped Wall Street's expectations and pushed the business to overall sales and earnings beats in the quarter, but some investors and analysts didn't think the company's guidance was bullish enough.
AMD has tended to err on the conservative side lately when it comes to issuing guidance, and it wouldn't be surprising to see significant near-term gains kicked off by Q4 numbers that come in better than broadly expected. But more importantly for long-term investors, the business remains poised to benefit from the unfolding AI revolution.
The company's competitive positioning in the highly lucrative GPU category isn't as as strong as Nvidia's, but AMD's lagging stock performance opens the door for investors who buy shares at today's prices to see big gains.
Aehr Test Systems is a buy for enterprising investors
Lee Samaha: It's fair to say it hasn't been a vintage year for the provider of burn-in testing equipment to the chip industry. Aehr Test Systems (AEHR 1.35%) makes silicon carbide chip testing equipment, and its primary growth market comes from its use in electric vehicles (EVs). Silicon carbide chips have qualities that make them more efficient than silicon in power electronics, making them ideal for EVs.
There's little doubt that the adoption of silicon carbide chips will grow, fueling demand for Aehr's solutions. However, growth expectations for both the chips and Aehr's sales have been pared back this year due to the slowing growth of EV sales, which has caused automakers to defer investment in production lines. As a result, the company's share price is down roughly 72% from its lifetime high as of this writing.
Still, the slowdown -- primarily related to relatively high interest rates -- is unlikely to last forever, and no one disputes that EVs are the transportation industry's future. In addition, Aehr recently inked a deal to sell an initial $10 million worth of equipment to an artificial intelligence customer. The agreement helps diversify Aehr's end markets and customer base and de-risks the stock.
With the company successfully opening new end markets and a likely recovery in its EV end markets, Aehr Test Systems has plenty of potential to grow. Now could be an opportune time to buy the stock.
