The stock market is experiencing unprecedented highs, notably in the tech sector. Over the past two years, the S&P 500 index has increased by 49%, while the Nasdaq Composite index, which has a strong tech presence, has climbed by 68%. Both indices were trading about 1% below their record highs on Thursday, November 14. However, not all tech stocks have benefited from this rise. Despite their involvement in the profitable artificial intelligence (AI) sector, Advanced Micro Devices (AMD) and Micron Technology (MU) are currently trading more than 30% below their peak prices. I believe that both Micron and AMD present excellent AI investment opportunities due to their recent price dips. Let’s delve into these undervalued AI companies. **Micron and AMD’s Connection to the AI Market** These AI hardware companies compete with more prominent rivals like Nvidia but remain deeply embedded in the AI market. Here’s what you should know about the AI offerings of Micron and AMD. AMD specializes in high-performance computer processors, offering products such as the Ryzen line for computers, the Epyc line for servers, and the Instinct series for AI computing.

Instinct chips compete with Nvidia’s AI solutions, and AI supercomputers often use Epyc processors for managing AI computations. System builders frequently pair AMD or Nvidia accelerators with AMD and Intel processors, with various combinations powering many of the world's largest supercomputers in 2024. Nvidia and AMD’s AI accelerators come with substantial high-speed memory. For instance, Nvidia’s H200 card includes 141 gigabytes (GB) of memory, while AMD's competing Instinct 205X has 128 GB. Moreover, these memory capacities don’t include the memory tied to the processors or solid-state devices (SSD) providing long-term storage. On the consumer side, smartphones and other devices enabled with AI features also demand more memory, which benefits Micron, a leading producer of high-speed memory chips, due to increasing demand. **Current AI-Driven Revenue Growth** For these companies, the AI market is already boosting revenues significantly. AMD’s sales for the third quarter rose by 18% compared to the previous year, driven by a 122% increase in its data center division, which includes Epyc and Instinct AI chips. In Micron's latest fourth-quarter report, revenue surged 93% year over year, fueled by "robust AI demand" and increasing data center sales. **Affordable Growers in the AI Space** Although both stocks may seem expensive based on current results, with AMD trading at 124 times trailing earnings and 145 times free cash flow, and Micron at 147 and 909, respectively, their long-term growth prospects remain strong. These companies are rebounding from a downturn in the semiconductor industry caused by manufacturing shortages and inflation. Looking ahead, AMD’s forward price-to-earnings ratio is 27, while Micron's is just 7. 7, presenting potential opportunities for growth-focused investors.