2 Extraordinary Artificial Intelligence (AI) Stocks Down 43% and 31% to Buy Before They Turn Around in 2025

AI Industry Overview - AI advancements drove stock prices of major companies higher in 2024, but not all AI innovators benefited equally [1] - Stock prices are influenced by financial results exceeding forecasts or management expectations surpassing investor sentiment [2] - Two companies, AMD and Adobe, made significant AI strides but saw stock declines due to delayed payoff expectations [3] Advanced Micro Devices (AMD) - AMD has been secondary to Nvidia in GPU development for AI applications but holds a strong position in AI data center chips [4] - AMD secured deals with major tech companies like Oracle, Microsoft, and Meta, indicating a strategy to counter Nvidia's dominance [5] - AMD's AI accelerators are more cost-effective for inference performance compared to Nvidia's, making them attractive for running AI applications [6] - AMD's data center revenue grew 122% YoY in Q3 2024, outperforming Nvidia's 112% growth in the same segment [7] - AMD is accelerating AI chip development, with the Instinct MI325X successor due in less than a year and the MI400 line expected in early 2026 [8] - AMD's forward P/E ratio of 24 suggests a relative bargain, with analysts expecting 54% EPS growth in 2025 [9] Adobe - Adobe enhanced its AI-powered features in 2024, notably with GenStudio, which integrates creative and marketing software for AI-driven campaigns [10] - Adobe's focus on commercial-safe generative AI provides a competitive edge, ensuring professional creatives avoid copyright or trademark issues [11] - Adobe Express, a free software, has attracted more users, with strong conversion rates to paid options due to advanced AI features [12] - Adobe implemented price increases and a credit-based system for generative AI features, driving incremental revenue [13] - Adobe's Digital Media ARR increased by $2 billion in 2024, with total revenue growing 11$20.20 to $20.50, below analyst expectations [15] - Adobe is well-positioned for steady revenue growth and margin expansion, with shares trading at less than 22 times the midpoint of its 2025 EPS outlook [16]