After some wild market swings earlier this year, the S&P 500 has steadied and even clawed back losses. But while many stocks have bounced back strong, some solid players are still trading far below their previous highs. Among these, Advanced Micro Devices (AMD) and PTC stand out—both down sharply yet offering interesting chances for investors who don’t mind a bit of patience.
Let’s unpack why these two stocks, despite recent setbacks, could be promising buys right now.
AMD’s AI Battle: Second Place Isn’t So Bad
AMD’s story in 2024 was full of highs and lows. The buzz around artificial intelligence (AI) pushed AMD’s shares to all-time highs last year. But enthusiasm soon cooled off as sales of their AI processors didn’t quite meet sky-high expectations. The result? AMD’s stock plunged about 46% from that peak.
Now, here’s the thing—Nvidia has the clear lead in the AI processor space. Their CUDA platform is basically the gold standard for AI model development. It’s like they have the Midas touch right now. AMD trying to topple Nvidia at the high end is a tough hill to climb, no doubt. But does AMD need to beat Nvidia to make investors money? Not really.
You see, the AI processor market isn’t a winner-takes-all game. As AI tech evolves, demand for midrange, cost-effective processors is growing. Not every AI application requires the absolute fastest chips. AMD’s data center processors are gaining traction, helping push their gross margin up to 50% last quarter, from 47% the year before. Nvidia’s margin is higher at 78.4%, but AMD isn’t doing badly either.
The AI market’s growth means there’s room for AMD to shine even as the runner-up. Think of it like a marathon, not a sprint. With AI becoming more efficient, overall demand for processors could explode, giving AMD a sizable piece of the pie.
PTC’s Quiet Strength in Manufacturing Software
PTC’s been flying a bit under the radar this year, with its stock down roughly 14% from the all-time high. That’s partly because economic uncertainty and trade tensions have made customers cautious. Sales cycles are stretching out, and contracts are shrinking.
But PTC isn’t just any software company. It’s a core player in manufacturing’s digital transformation with its computer-aided design (CAD) and product lifecycle management (PLM) software. The company’s offerings are becoming more valuable thanks to AI, analytics, and the rise of digital twins—virtual replicas that help optimize real-world manufacturing processes.
Sure, customers are holding back now. But PTC’s long-term outlook looks solid. The company recently lowered its growth guidance slightly—from an expected 9%-10% annual recurring revenue (ARR) growth to 7%-9%. That’s not great news, but there’s a silver lining.
PTC raised its free cash flow (FCF) forecast to about $840-$850 million, up from previous estimates. Adjusting for a one-time $19 million cost tied to reorganizing sales operations, the underlying cash flow is even better—around $864 million. This puts PTC’s price at about 22 times FCF, which looks pretty attractive for a company growing steadily.
The table below highlights key financial data for AMD and PTC:
| Metric | AMD | PTC |
|---|---|---|
| Market Cap | $180 billion | $20 billion |
| Stock Price | $110.71 | $170.44 |
| 52-Week Range | $76.48 – $187.28 | $133.38 – $203.09 |
| Gross Margin | 50% (recent quarter) | 79.25% |
| YTD Stock Change | -46% from peak | -14% from peak |
| Dividend Yield | N/A | N/A |
| Free Cash Flow (2025e) | N/A | $840M – $850M (adjusted) |
What Investors Should Keep in Mind
Buying stocks that have taken a hit can be tricky. AMD’s AI ambitions face stiff competition, and PTC’s growth has slowed in the short term. Yet, both companies operate in fast-growing, tech-driven sectors.
Here are some key points to mull over:
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AMD’s focus on data centers and midrange AI chips could capture a growing slice of AI’s expanding market.
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PTC’s software sits at the heart of manufacturing’s digitization, a trend unlikely to fade anytime soon.
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Economic uncertainty may linger, meaning short-term bumps might continue.
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Long-term, both companies offer promising growth backed by solid financials.
It’s a reminder that sometimes, the best deals come with a little risk—and a lot of patience.
Looking Beyond the Headlines
Investors should also note that the Motley Fool’s Stock Advisor team recently released their top 10 stock picks—AMD wasn’t on the list. That’s not necessarily a red flag but signals there may be better options for those wanting safer or more explosive growth plays.
History shows patience pays off. Netflix’s Stock Advisor recommendation back in 2004 turned a $1,000 investment into over $640,000. Nvidia’s pick in 2005 exploded to over $800,000 from $1,000 invested. So, while AMD might not be the hottest pick now, it’s not out of the race.
Meanwhile, PTC might not get headlines every day, but its steady growth and improving cash flow make it a quiet contender worth watching.
So, if you’re hunting for stocks that could bounce back with a bang, these two may be worth a second glance—even if they’re not grabbing all the headlines.
