Overview

BofA Securities updated its semiconductor sector rankings, citing the rise of agentic AI workloads as a catalyst that expands the server CPU market. The firm now projects the 2030 server CPU total addressable market (TAM) at over $170 billion, up from a prior estimate of $125 billion, representing a 37% compound annual growth rate (CAGR) for 2025‑2030, compared with the earlier 29% forecast.

Agentic AI Impact on CPU Demand

Agentic AI is described as multi‑step systems that plan, reason, retrieve information, use tools, and execute code simultaneously, shifting from single‑prompt generative AI to latency‑sensitive, sequential, and intensive workloads better suited to CPUs. While accelerators remain essential for inference, many orchestration and decision‑making functions are expected to migrate to CPUs, broadening the opportunity for both x86 incumbents and ARM‑based challengers.

Company‑Specific Updates

  • Advanced Micro Devices (AMD) – BofA named AMD its top CPU pick, raising the price objective to $560 from $500 based on incumbency, pipeline strength, and an upcoming AI Day featuring the Venice launch. AMD also led a funding round for cloud‑computing startup TensorWave, which exclusively uses AMD hardware, and announced a partnership with Amkor Technology for chip packaging.
  • Nvidia Corp – Remains BofA’s top sector pick due to its full‑stack AI leadership and tight CPU‑GPU‑network integration. Nvidia announced a six‑year AI infrastructure collaboration with SharonAI Holdings to deploy new data‑center capacity in Australia, planning to use up to 40,000 Grace Blackwell GB300 GPUs.
  • Arm Holdings – BofA raised Arm’s price objective to $335 from $245, applying a fiscal 2031 sum‑of‑parts valuation that attributes $229 to IP and $106 to chip segments, deeming the stock fairly valued. Separately, Mizuho increased its price target on Arm to $500 from $425, maintaining an Outperform rating and highlighting the expansion of Arm’s AGI CPU platform.
  • Intel Corp – Received a double‑upgrade to Buy with a $135 price objective. The higher target reflects both near‑term CPU upside and long‑term foundry opportunities, as well as the broader agentic CPU market. Analysts now see 2030 earnings per share (EPS) exceeding $6, versus the earlier $3‑$4 range. Conversely, Northland downgraded Intel to Market Perform from Outperform, citing valuation concerns.
  • Qualcomm Inc – BofA rates Qualcomm Underperform, despite expectations of new AI CPU announcements at its June 2024 AI Day in New York City, due to tough competition and a limited addressable market. Bernstein upgraded Qualcomm to Outperform, raising its price target and citing accelerating AI adoption in smartphones. Tigress Financial Partners also increased its price target on the company.

Additional Notes

The article was generated with AI assistance and reviewed by an editor, as indicated in the footer.