The Nasdaq Composite Index is sitting close to new highs. Investors are bullish on the long-term growth potential of companies involved in artificial intelligence (AI), cloud computing, and data center infrastructure, but some of the leaders in these markets are trading well off their highs.

Advanced Micro Devices (AMD -0.18%), a leading chip supplier, and Snowflake (SNOW 0.43%), a leader in cloud computing, haven’t impressed investors this year with their financial results. However, there are good reasons to believe these stocks will rebound in 2025.

1. Advanced Micro Devices

Advanced Micro Devices is one of the top semiconductor companies-with tremendous opportunities for growth. It is the second leading supplier of graphics processing units (GPUs) for data centers behind Nvidia, and it has been gaining share in recent years on Intel in the market for central processing units (CPUs) used in servers and consumer PCs.

Like Nvidia, AMD is benefiting from strong data center demand, but other markets are not performing as well for the company, which has weighed on its share price this year. AMD’s total revenue grew just 7% year over year in the second quarter, and it will need to accelerate that growth to deliver more gains for investors.

The stock is currently trading 30% off its 52-week high. In the second quarter, the company’s data center and client segments, including AMD’s Ryzen PC processors, saw strong demand. This was offset by a steep decline in revenue in the gaming and embedded segments, including sales of chips used in auto and industrial applications.

The gaming and embedded businesses are being impacted by macroeconomic headwinds, so it remains uncertain when these markets will return to growth. Fortunately, AMD’s data center revenue is exploding, more than doubling year over year, and it is now the company’s largest revenue source.

Microsoft is using AMD’s MI300X GPU to power several AI services available through Copilot. Next year, AMD is planning to launch new AI chips that could sustain robust data center growth. The data center business will likely contribute a higher percentage to AMD’s top line over the next few years, and that could push the stock higher.

There is a lot of growth brewing under the surface here. Wall Street expects AMD’s revenue growth to accelerate next year to 28%, with earnings expected to increase 59%. AMD has met or beaten Wall Street’s estimates over the last four quarters.

Assuming that streak continues, AMD investors could see a sharp rebound in the shares next year. The stock’s forward price-to-earnings ratio of 29 based on 2025 estimates is a bargain relative to growth expectations.

2. Snowflake

Businesses are still in the early stages of migrating their data systems over to the cloud, where many companies are already using Snowflake’s Data Cloud platform to consolidate and access quality data for use with AI models.

The stock is currently down 50% from its 52-week high. Snowflake entered the year with momentum after posting 38% growth in product revenue last year, but management offered lower-than-expected revenue guidance in the first quarter, sending the stock lower.

Since that disappointing start to the year, Snowflake delivered top-line growth that exceeded company guidance. Product revenue growth remained at 30% or better through the first half of the year. The company’s full-year guidance of 26% growth in product revenue still doesn’t sit well with Wall Street, but the stock could be oversold. This is still a profitable and fast-growing business that is seeing strong demand for AI tools.

Snowflake is focused on making AI easy to use for businesses. It continues to release new products at a good clip. In the second quarter, it announced nine new products and launched a total of 15 product capabilities. One product that is seeing strong demand is Cortex AI, which allows customers to ask questions and quickly get answers from data using the power of large language models.

Management is seeing broad adoption of its AI products. Over 2,500 customer accounts were using Snowflake AI on a weekly basis in fiscal Q2. The company expects a growing contribution of revenue from AI next year. 

The long-term growth opportunity for Snowflake is still intact, and the stock’s haircut means investors are getting much better value. Snowflake continues to see existing customers expand their use of services on the platform, as noted by its net revenue retention rate of 127%, while its trailing 12-month free cash flow, an important measure of a company’s profitability, has doubled over the last two years to $815 million.

Analysts expect earnings to increase by 50% next year and grow 23% on an annualized basis over the long term. With the stock trading at a more reasonable price-to-sales multiple of 12, Snowflake investors should expect the stock to bounce higher in 2025.