Investors on the hunt for beaten-down technology stocks that are currently undervalued should consider semiconductor and chip company Advanced Micro Devices (NASDAQ:AMD).

The Santa Clara, California-based company that makes the microprocessors and chips that help to power everything from personal computers and video game consoles to cloud computing servers and artificial intelligence applications is landing on a growing number of analysts’ lists of the best technology stocks to buy amid the current market downturn. Investment bank Morgan Stanley (NYSE:MS) just issued a bullish note on AMD stock, saying it can rally 20% or more from current levels. Right now, AMD’s share price sits at just below $80, only a tick higher than its 52-week low and 50% below its annual high of $164.46.

Upward Revisions

Since AMD designs but does not manufacture its own chips, the decline in AMD stock is almost entirely due to concerns related to a backlog in semiconductor and microchip manufacturing at foundries around the world, as well as forecasts that demand for semiconductors will slow this year if, as many economists and analysts now forecast, the global economy falls into a recession. The drop in AMD’s share price certainly has nothing to do with the company’s earnings or performance, which have continued to be red hot despite macroeconomic headwinds that also include persistent inflation, rising interest rates, and war in Europe.

At the beginning of May, AMD issued earnings that blew analysts’ hair back. For this year’s first quarter (Q1), AMD reported earnings per share (EPS) of $1.13 versus $0.91 that had been expected on Wall Street, up 117% from a year earlier. Revenues for the first quarter came in at $5.89 billion, which was ahead of the $5.52 billion that had been anticipated and up 71% year-over-year. Every one of AMD’s individual lines of business reported double digit growth during the January through March period.

The only thing better than the Q1 print was AMD’s forward guidance. The company said it now expects sales of $6.5 billion in the current second quarter, ahead of analyst expectations for $6.38 billion. Looking at the entire year, AMD now forecasts revenue of $26.3 billion, up 22% from previous guidance of $21.5 billion in revenue. Analysts were guiding for full-year 2022 revenue 0f $25.12 billion. AMD said it is bullish on the year as demand for its chips that are used in personal computers and laptops, as well as in cloud computing servers, remains robust.

Xilinx Deal

In addition to demand for its semiconductors and microchips remaining strong, AMD is also getting a lift from its acquisition of fellow semiconductor company Xilinx, which was completed in February of this year. The Xilinx purchase was a hefty one, coming with a $35 billion price tag. But AMD says that Xilinx is already having a positive impact on its earnings. The company’s Q1 results included six weeks of revenue post-acquisition, and, without Xilinx sales added, AMD’s revenue would have increased 55% year-over-year rather than growing 71% on an annualized basis. Going forward, Xilinx, which specializes in programmable logic devices, should add even more growth to AMD’s finances.

In Q4, AMD is set to release its highly anticipated fourth-generation EPYC server processor. Based on a five nanometer manufacturing process, AMD claims these processors will deliver a 75% performance improvement over the current generation of microchips. The introduction of the fourth generation EPYC server processor should further drive sales into 2023 and beyond. Plus, AMD currently has an attractive price-to-earnings (P/E) ratio of 30 that, while not necessarily cheap, is much lower than the P/E ratio of 103 that the stock averaged over the last five years.

The median price target on AMD stock among 36 analysts who cover the company is $134, implying 78.5% upside in the coming 12 months.

Buy AMD Stock

Around $80 per share and sitting near its 52-week low, AMD stock is a screaming buy. Investors should use the current market selloff as an opportunity to buy a best-in-class technology stock and leading semiconductor company on the cheap. The fact that AMD has continued to issue stellar earnings and growth in spite of all the current challenges and is upwardly revising its forecasts for the year is a testament to how well the company is run and performing. When the dust finally settles on the current bear market, AMD is one of the stronger technology stocks that will still be standing and positioned for a great future. AMD stock is a strong buy.

On the date of publication, Joel Baglole held a long position in MS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.