Technology stocks were in fine form on the stock market in 2024, with the tech-laden Nasdaq Composite (^IXIC -0.40%) index clocking impressive gains of 28.6% last year following an even stronger jump of 43% in 2023.

Historical trends indicate that the Nasdaq Composite could be on track to deliver more gains in 2025. In any year where the Nasdaq managed a 30%-plus gain overall, it averaged a 19% jump in the year that followed. Moreover, the Nasdaq averages a 17% return following a year in which it delivered returns of 20% or more.

Of course, veteran investors are well aware that past returns cannot be taken as reliable indicators of future performance. However, the broader sentiment on Wall Street suggests that the stock market could head higher in 2025 on the back of continued investments in artificial intelligence (AI), a robust U.S. economy, and additional interest rate cuts by the Federal Reserve.

Given this upbeat sentiment, there is no harm in taking a closer look at the prospects of Advanced Micro Devices (AMD -4.96%) and Dell Technologies (DELL -2.36%), two AI stocks that have been hammered in recent months but are expected to make a solid comeback in the new year.

1. Advanced Micro Devices

AMD stock is down nearly 39% from its all-time high set in March 2024. That may seem surprising considering that AMD's growth profile has been improving in recent quarters on news of improving demand for its AI chips used in data centers as well as in personal computers (PCs).

Of course, AMD is nowhere close to Nvidia in the market for data center graphics processing units (GPUs), and that's probably a primary reason why the stock slipped significantly in the past year -- its AI-powered growth isn't as solid as the market may have liked. However, savvy investors would do well to focus on the bigger picture, especially considering the gains that Wall Street expects from AMD in 2025.

AMD carries a 12-month consensus price target of $183, according to 55 analysts covering the stock. That would be a 41% jump from current levels. What's more, 80% of the analysts recommend buying AMD stock. That's not surprising considering that AMD trades at an attractive 24 times forward earnings and is expected to deliver a 54% increase in earnings in 2025 to $5.13 per share, which would be much higher than 2024's estimated earnings growth of 26%.

There are a couple of factors that could help AMD deliver such strong growth in 2025. First, sales of PCs are expected to jump 4.3% in 2025, according to market research firm IDC. That would be a big improvement over last year when PC sales were flat. The improving prospects of the PC market bode well for AMD's client processor business, which has already started gaining terrific traction.

AMD's revenue from the client segment in the third quarter of 2024 increased 29% year over year on the back of healthy demand for its Ryzen central processing units (CPUs). The new year could be even better for this segment as the company's AI-focused Ryzen CPUs are expected to power more than 100 commercial PC designs in 2025, which management believes will set the company up for more share gains in the client CPU market.

The second factor is the continued growth of its data center GPU business. AMD expects to finish 2024 with at least $5 billion in data center GPU revenue. That would be a massive improvement over 2023 when the company sold $400 million worth of AI GPUs in the fourth quarter of the year. The company seems on track to sell more data center GPUs in 2025 thanks to a combination of strong customer demand and an improvement in the supply chain.

This AI stock indeed seems capable of delivering the impressive upside that Wall Street is expecting from it this year, so buying AMD right now could turn out to be a smart move given its attractive valuation.

2. Dell Technologies

Dell Technologies is another stock that has been in bad shape on the market over the past few months, losing 30% of its value since hitting an all-time high in May 2024. However, analysts expect the stock to regain its mojo over the next year.

Dell has a 12-month consensus price target of $155, which would be a 24% jump from current levels, according to 29 analysts covering the stock. It is worth noting that 86% of those analysts rate Dell as a buy. Again, that's not surprising considering the potential for AI to influence Dell's business in 2025.

The company already reports a sharp turnaround in its infrastructure solutions group (ISG) segment through which it sells servers and networking equipment. There was a 34% year-over-year increase in revenue from this segment in the third quarter of fiscal 2025 (which ended on Nov. 1, 2024) to $11.4 billion.

The booming demand for AI servers boosted Dell's ISG business and should continue doing so in 2025 thanks to its growing order book and improving revenue pipeline. Dell received record AI server orders worth $3.6 billion during fiscal Q3, which was higher than the $2.9 billion worth of revenue it generated from sales of AI servers during the quarter.

This is a trend with staying power. Dell management says that its AI server pipeline grew by more than 50% in the previous quarter. Moreover, the global AI server market is expected to clock an annual growth rate of 27% through 2033, generating $343 billion in revenue at the end of the forecast period as compared to $30 billion in 2023. This suggests that Dell is at the beginning of a massive growth opportunity in the AI server market that should help it maintain its outstanding growth for years to come.

Elsewhere, the PC market is set for a turnaround in 2025 following last year's flat performance. This bodes well for Dell's client solutions group business, through which the company sells commercial and consumer PCs. This segment's revenue was down 1% year over year in Q3, but that is likely to change this year thanks to catalysts such as AI PCs, which are projected to grow shipments by 165% in 2025.

Dell's earnings in the new fiscal year (which will begin next month) could jump 20% following an estimated increase of 10% in fiscal 2025. With shares of this technology giant currently trading at just 20.6 times trailing earnings, buying Dell looks like a no-brainer. The stronger growth in the company's earnings in the coming fiscal year could help the stock soar.