Technology stocks have regained their mojo of late, and the latest Consumer Price Index data and the investor optimism it has sparked could give companies in this beaten-down sector a boost as 2022 draws to a close. Advanced Micro Devices (AMD -5.44%) and Taiwan Semiconductor Manufacturing (TSM -3.45%), popularly known as TSMC, are two tech stocks worth watching. Shares of AMD have jumped 23% in the past month, while TSMC stock is up 11% and it looks like there's room for more upside.

1. Advanced Micro Devices

AMD's latest rally seems justified considering a resilient performance amid tough times for the personal computer (PC) industry. The chipmaker's third-quarter revenue jumped 29% year over year to $5.6 billion, driven by the strength of its data center business. Data center revenue increased 45% year over year to $1.6 billion thanks to healthy demand for its Epyc server processors.

That was not surprising as AMD's share of the server processor market increased once again last quarter. The company exited Q3 with 17.5% of the server market under its control, according to Mercury Research. This was the 14th consecutive quarter of growth in AMD's server market share, and it was a big one with a year-over-year gain of 7.3 percentage points.

It won't be surprising to see AMD's data center business get stronger as the company has launched a new generation of Epyc server processors. Companies including Dell, Google, Hewlett Packard Enterprise, Lenovo, Microsoft, Oracle, and VMware have already announced offerings based on the latest Epyc processors.

The robust demand for AMD's new server processors isn't surprising, as the company promises a 2.8x increase in performance and a 54% reduction in power consumption. So, the server market could help AMD mitigate the PC market's weakness thanks to the massive revenue opportunity that lies ahead of the company in this space.

Another catalyst that could help AMD beat the slump in PC sales is the gaming console market. Sony, for instance, is looking to ramp up the production of the PlayStation 5 console. This should bode well for AMD as it supplies semicustom chips to Sony for the PS5.

In all, AMD's diversified catalysts should help it get out of the tough spot it is in right now.

2. TSMC

TSMC stock has rallied of late thanks to overall increased investor optimism about tech stocks and the company's solid third-quarter 2022 results that were released on Oct. 13. The foundry giant's revenue jumped 36% year over year last quarter to $20.2 billion. Adjusted earnings shot up 66% over the prior-year period to $1.79 per share.

TSMC's solid results show that the overall demand for chips continues to remain healthy despite weakness in certain pockets such as smartphones and PCs. The company saw robust demand for chips from the Internet of Things, automotive, and data center markets last quarter. Additionally, the company's solid customer base, which includes the likes of Apple, has allowed it to beat the weakness in the smartphone market.

More importantly, TSMC's outlook indicates that it is built for more growth. Its guidance for $20.3 billion in Q4 revenue at the midpoint would translate into year-over-year growth of 29%. What's more, the Taiwan-based company is unlikely to take its foot off the gas in the next couple of years. You can see revenue estimates in the chart below.

TSM Revenue Estimates for Current Fiscal Year Chart.

TSM Revenue Estimates for Current Fiscal Year data by YCharts.

It is also worth noting that the secular growth in the semiconductor market should be a long-term tailwind for TSMC. The global foundry market's revenue is expected to hit $111 billion in 2027 as compared to $73 billion last year. TSMC is in a position to corner a nice chunk of this incremental revenue opportunity as it controls 56% of the global foundry market, according to Counterpoint Research.

TSMC's earnings are expected to grow at an annual pace of 21% over the next five years. With the stock trading at just 16 times trailing earnings and 12 times forward earnings, TSMC looks like a steal right now as the multiples represent a discount to the S&P 500's price-to-earnings ratio of 19. With TSMC stock already on a bull run, investors should consider grabbing it while it is still cheap, as its solid prospects point toward more upside.