Many investors want to pick stocks that beat the average return of the market indexes. To achieve that goal, it can be to your advantage to buy shares of promising growth stocks when they go on sale.
Here are two growth stocks that recently pulled back off their highs and have phenomenal prospects for above-average returns. These companies are well-positioned in their respective industries, boasting innovative products, solid financials, and strategic growth plans that could drive significant long-term value.
1. Advanced Micro Devices
Shares of leading semiconductor companies recently pulled back on concerns that the Biden administration is considering cracking down on products imported from overseas that use American technology. Top chip stocks were trading lower on the news, including Advanced Micro Devices (NASDAQ: AMD), which is currently trading 22% off its recent high.
While export controls could ding sales in the near term, it’s not going to prevent the tsunami of demand for advanced chips used in data centers and training artificial intelligence (AI) models. This is a lucrative opportunity for AMD.
Analysts have significantly raised their earnings forecasts over the last year. AMD’s data center revenue is accelerating, soaring 80% year over year last quarter, driven by its new MI300 data center chips. These high-powered chips command higher selling prices and margins than chips used in consumer PCs, which bodes well for AMD’s long-term profitability.
AMD sells semiconductor products in a variety of markets, including consumers, communications infrastructure, aerospace and defense, and automotive, but data center and AI applications are becoming increasingly important to the business. After nearly doubling over the year-ago quarter, data center revenue now makes up almost half of AMD’s total revenue. That’s up from 25% in fiscal year 2022, reflecting strong growth in AMD’s data center number-crunching product sales.
With analysts now projecting annualized earnings growth to clock in at 43%, AMD stock should recover and deliver market-beating returns over the…
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