The incident occurred when D Nanaji (19) and Ch Venkata Prudhvi (19) entered the sea to take a dip on the occasion of Magh Purnima.
The deceased were first year B.Tech students of a private college near Tuni in East Godavari district.
Police said their friend T Ashok managed to swim to the shore.
A case of accidental death has been registered.
The bodies of the duo were fished out and handed over to their family members after postmortem.