As 2024 winds down, the stock market has delivered exceptional performances, with tech giants like Nvidia and Apple reaching all-time highs. However, some promising technology stocks are trading significantly below their previous peaks, offering attractive opportunities for long-term investors. Here’s why Advanced Micro Devices (AMD) and Aehr Test Systems (AEHR) stand out as undervalued tech plays for 2025.

1. Advanced Micro Devices (AMD): An Undervalued AI Stock

  • Performance Snapshot: Despite a strong five-year rally (+182%), AMD’s stock is down 40% from its lifetime high earlier this year.
  • AI Growth Potential: AMD’s data center revenue, a crucial segment driven by AI, grew 122% year-over-year in Q3 2024, contributing $3.5 billion in sales.
  • Challenges: The slower adoption of AI-related processors compared to Nvidia has tempered investor enthusiasm. Additionally, AMD’s conservative guidance has caused some market skepticism.
  • Opportunity: AMD’s strong position in CPUs, GPUs, and data centers ensures it will remain a key player in the unfolding AI revolution. The recent stock pullback presents an entry point for investors who believe in its long-term growth potential.

2. Aehr Test Systems (AEHR): A Play on EV and AI Markets

  • Business Overview: Aehr specializes in silicon carbide chip testing equipment, which is essential for electric vehicles (EVs). Silicon carbide chips offer efficiency benefits, making them a preferred choice in EV power systems.
  • Challenges: The slowing EV market due to high interest rates has caused automakers to delay production investments, contributing to a 72% drop in Aehr’s stock from its peak.
  • Diversification: Aehr recently signed a $10 million deal with an artificial intelligence customer, expanding its market beyond EVs and reducing reliance on a single industry.
  • Future Potential: With the eventual recovery of the EV market and its expansion into AI, Aehr is well-positioned for substantial growth in the coming years.

Both AMD and Aehr Test Systems offer compelling growth opportunities despite their recent setbacks. AMD is poised to benefit from its strong foothold in AI-driven data center solutions, while Aehr stands to gain from a rebound in EV demand and its foray into AI. For investors looking to capitalize on undervalued tech stocks, these companies provide a promising mix of near-term recovery potential and long-term growth prospects.

This story was originally featured on Finance.Yahoo.

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