Yep. We do it all the time. One way is to simply tell PHP that you want the tags echoed. Like so:
<?php
echo('<b>Hi</b> Nice to meet you!');
?>
Sometimes you want instead to simply use the PHP in parts of a page and leave the rest. You can do this, too.
<body>
<div class="login">
<?php
if($user->loggedIn()){
?>
<b>Hi!</b>
<?php
}else{
?>
<!-- HTML FORM HERE -->
<?php
}
?>
</div>
</body>