AMD Stock And 2 US Tech Picks With Strong Margins

US large cap technology stocks are sitting at the crossroads of powerful forces right now. A sharp 19% S&P 500 surge in two months, strong Q1 earnings growth and rising inflation with possible Fed rate hikes are pulling market sentiment in different directions. For investors, the question is which individual stocks appear well placed, or potentially vulnerable, to this mix of stronger profits and tighter policy. This article walks through three US technology stocks from our screener that appear positively exposed to these catalysts, helping you decide whether they deserve a closer look for your portfolio.

Overview: Advanced Micro Devices is a global semiconductor company that designs and sells central processing units (CPUs), graphics chips (GPUs), AI accelerators and adaptive computing products that power data centers, PCs, gaming consoles and embedded systems.

Operations: AMD generates most of its revenue from the Data Center segment at US$18.7b, followed by Client at US$11.2b, Gaming at US$4.0b and Embedded at US$3.5b.

Market Cap: US$876.2b

Advanced Micro Devices sits at the center of the current AI and data center enthusiasm, with strong recent earnings growth, expanding net margins at 13.2% and major partnerships across hyperscalers such as Meta, OpenAI and leading cloud providers. That growth story comes with important qualifiers, including a premium valuation, higher share price volatility and reliance on continued heavy investment and external funding. Competitive pressure from Nvidia and others, tighter export controls and potential shifts in AI spending could all challenge the bullish narrative. For investors, the key consideration is whether AMD’s mix of high growth expectations, AI infrastructure exposure and execution risk still presents an appealing large cap technology opportunity or a stock where optimism has moved ahead of fundamentals.

Advanced Micro Devices’ AI story is racing ahead, but the real tension is how growth expectations stack up against execution and funding risks. Before assuming the market has priced it all in, review the 2 key rewards and 2 important warning signs

Overview: Applied Materials supplies the equipment, services, and software that chipmakers use to build semiconductor wafers and advanced chips, effectively sitting at the heart of the global electronics and AI supply chain.

Operations: Applied Materials generates most of its revenue from Semiconductor Systems at US$20.9b, with Applied Global Services contributing US$6.8b.

Market Cap: US$490.0b

Applied Materials gives you direct exposure to the capital spending behind the AI and semiconductor boom, with strong recent earnings growth, a high 35.6% return on equity and expanding net margins at 29.3%. The company benefits from growing recurring service revenues and deep collaboration with leading chipmakers on advanced packaging and next generation manufacturing, which can support resilience if chip cycles cool. At the same time, a higher P/E multiple, significant insider selling and heavy exposure to China, which accounts for roughly a quarter of revenue and faces export control risk, are important watchpoints. With the stock already above some analyst targets, the key question is whether current expectations fully reflect what Applied Materials could deliver next.

Applied Materials sits at the intersection of AI capital spending, recurring service revenue and a higher P/E multiple, yet the full picture is not immediately visible. To understand it more clearly, start with the 3 key rewards and 1 important warning sign

Overview: Micron Technology is a global memory and storage company that supplies DRAM, NAND and high bandwidth memory chips, along with SSDs and related software tools, for data centers, PCs, smartphones, automotive and other embedded devices.

Operations: Micron generates most of its revenue from the Cloud Memory Business Unit at US$20.96b, Mobile and Client Business Unit at US$18.98b, Core Data Center Business Unit at US$11.17b and Automotive and Embedded Business Unit at US$6.99b, with a small contribution from All Other at US$14m.

Market Cap: US$1,278.8b

Micron Technology is positioned in the AI and cloud build out, supplying the memory chips that large data centers, high performance GPUs and advanced devices depend on. It has recently reported earnings growth and net margins around 41.5%. The stock has outperformed the broader semiconductor sector and carries a P/E below the industry average, but there are important trade offs to weigh, including its valuation relative to some cash flow estimates, significant share price volatility and insider selling in recent months. With analysts debating how long tight memory supply and pricing power can last, the key question for investors is whether the current mix of AI-related demand, growth expectations and balance sheet strength aligns with their risk tolerance, time horizon and valuation framework.

Micron’s mix of AI momentum, 41.5% net margins and a P/E below the industry average suggests something in the story is still mispriced. The full picture only emerges in the 4 key rewards and 3 important warning signs (1 is major!)

The three US large cap technology stocks in this article are just a starting point, with the full screener surfacing 34 more companies with equally compelling narratives in the US Large-Cap Technology Stocks screener. Use Simply Wall St to identify, analyze and filter for the specific catalysts and narratives covered here so you can focus on the highest conviction opportunities that fit your own approach.

Take Control of Your Investment Journey

If Micron Technology or any of these companies sound like a great opportunity, register for FREE with Simply Wall St and add your companies to a Watchlist to monitor the share price against the fair value the ideal entry point.
Once you’ve made your move, manage your holdings with our Portfolio Command Center that filters out the noise to deliver only the most critical, actionable updates.
Throughout your journey, our Community allows you to filter the best ideas from thousands of investor perspectives.
By uncovering hidden catalysts and risks early, you’ll accelerate your decision-making and stay one step ahead of the market.

Seeking Fresh Alternatives Before Others Catch On

Some of the notable breakout stories are still flying under the radar for now, and that informational edge may not last indefinitely. Review these fresh ideas before they become widely followed.

• Consider resilient companies with income potential by reviewing the curated 8 dividend fortresses that could help keep cash flow working while prices are still settling.
• Look for companies where momentum and robust fundamentals intersect by checking the hand picked 45 high quality undervalued stocks before their valuations adjust to increased attention.
• Follow forward looking themes in computing and automation by scanning the carefully filtered 31 quantum computing stocks while these stories are still developing and not fully reflected in current pricing.

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com