AM stands for Amplitude modulation. It involves transmitting information by varying the amplitude of the EM waves while keeping the frequency constant. AM waves fall under the mediumwave broadcast band of frequencies. FM stands for frequency modulation, which means that the frequencies of the EM waves are varied while the amplitude is held constant. FM is preferred over AM, because it has less distortion, an improved signal to noise ratio, its higher frequency waves (in the very high frequency range) can carry more information than AM waves and there is less radiated power.
AM and FM signals