Jim Cramer has been quite the advocate of buying the dip in certain semiconductor stocks caught in the latest slump. Following the big rate cut, it’s not hard to imagine investors are feeling that much better about buying high-quality growth stocks on weakness.

Indeed, the semiconductor plays could cruise sideways into year’s end and still close the year with a respectable gain (21% or so). That said, with AI-related expectations now fanned a bit, all it could take is one upside surprise for any one of the semiconductor firms to cause a rush back into the names that were sold off viciously back in July. Of course, only time will tell if recent semi scene weakness is a buying opportunity or a passing of the baton to the next industry of leaders equipped to run with the AI ball.

Though the easiest gains may have already been made with the semi plays, I’d argue there’s still value in some of the more beaten down of the batch. Here are two names that were recently given Jim Cramer’s stamp of approval. And, no, you won’t find any Nvidia (NASDAQ:NVDA) here!

Key Points About This Article

• The semiconductor sell-off has opened up some pretty enticing entry points in a wide range of names that benefit from the secular rise of AI.
• Micron and AMD are two bruised semi stocks Jim Cramer thinks can lift themselves off the mat.
•  If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Micron

One of the biggest dangers of chasing high-flying semiconductor stocks is the magnitude of damage that arises when the cycle inevitably turns on itself. Demand for commoditized equipment, like memory chips made by Micron (NASDAQ:MU), can move quite rapidly, making the stock a tough longer-term hold for investors who aren’t fully subscribed to the secular rise of AI.

Undoubtedly, the memory market has slowed considerably from its peak levels. But the next upcycle may not be too far off, especially as the next generation of memory-hungry AI applications go online. The stock recently received a notable price target cut (to $135 from $165) courtesy of Stifel analyst Brian Chin, who thinks a memory market “lull” could be in the cards over the next few quarters as memory suppliers as demand cools and suppliers become “reluctant” to cut costs.

Even with the price target cut, Stifel’s price target entails a solid 50% gain from current levels. Shares are sitting down over 40% from their high and may be too cheap to pass up for investors seeking to play the memory side of the AI boom. Despite the stock’s death cross pattern and looming earnings, Jim Cramer sees MU stock as having an attractive entry point. I’d have to agree. The stock has been punished greatly, and the recent price target cuts still entail sizeable upside potential.

Advanced Micro Devices

Advanced Micro Devices (NASDAQ:AMD) is a hard-hit semiconductor stock that Cramer recently referred to as a “terrific” buy at below $150 per share. Today, the stock sits at just shy of $156 after rallying 16% off its early-September lows. For dip-buyers seeking a semiconductor stock with a better-looking chart (MU stock’s death cross is sure to make some uneasy), AMD stock’s potential double-bottom technical pattern may be more comforting to get behind.

Additionally, Cramer gave AMD stock a huge vote of confidence when he said AMD is the only company that “has a chance” of closing the gap with Nvidia. Undoubtedly, Nvidia may get all the credit for being head and shoulders above its rivals. However, as AMD makes smart deals while advancing its own AI chips, I do think it’s not all too far-fetched to envision AMD breathing down Nvidia’s neck in a few years’ time. And if anti-trust regulators do stand in front of Nvidia to temper its dominance, it would be AMD that stands to win in a big-time way.

So, if you missed the boat on Nvidia, AMD may be the next best thing. The stock looks much cheaper at 29.41 times forward price-to-earnings (P/E), still well below Nvidia’s 42.1 times forward P/E. As AMD readies its next-generation AI chip, the Instinct MI300 series, to take on Nvidia in the data center, a potential recovery in notebooks may help give shares of AMD a nice jolt in the meantime.

Citi Research reiterated its Buy recommendation on the name, citing the recent 15% month-over-month bump in August notebook shipments.

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