AMD Jumps 18% Pre-market as CPU TAM Hits $120B; UBS Sees Arm Outperforming
AI Podcast
AMD shares surged after reporting Q1 results, with data center revenue surpassing Intel and a raised server CPU TAM outlook to $120 billion by 2030. UBS forecasts the server CPU market to reach $170 billion by 2030, driven by Agentic AI workloads shifting computation to CPUs. UBS predicts Arm will be the primary beneficiary, projecting its server CPU market share to reach 40-45% by 2030, with revenue share at 50-55%. Arm's architectural advantages and hyperscaler adoption position it to capture over 75% of the head node CPU market.
TradingKey - Before the U.S. market open on Wednesday, AMD shares surged more than 18%. The previous day, the company delivered better-than-expected first-quarter results, with data center revenue surpassing Intel's for the first time. It also significantly raised its long-term market outlook for server CPUs, increasing the 2030 total addressable market (TAM) for server CPUs from the previous $60 billion to $120 billion.
UBS (UBS) also reaffirmed the value of the CPU market in its latest research report. According to its forecast, the potential market size for server CPUs will grow from approximately $30 billion in 2025 to about $170 billion by 2030, a nearly fivefold increase over five years. Furthermore, UBS predicts that the biggest beneficiary in the server CPU segment at that time will be Arm (ARM) , followed by AMD.
The Agentic AI Pivot: A $170 Billion CPU Opportunity
UBS noted in a research report that the shifting focus of AI applications toward Agentic AI has fundamentally changed the landscape. The firm cited expert data showing that while 70-80% of computing power in traditional AI workloads was consumed by GPUs, 70-80% of the workload shifts to CPUs in agentic inference. In terms of core ratios, the number of CPU cores required per GPU in Agentic AI scenarios is 5 to 10 times the amount required in traditional training environments. This shift is expected to unlock significant incremental growth potential for the CPU market.
Analysts have segmented the future CPU market into three core categories: the traditional server market, AI Head Nodes, and AI Standalone racks. AI Head Nodes serve as the core of AI computing clusters, bundled with GPU racks and primarily responsible for task orchestration and optimizing GPU utilization. AI Standalone racks are pure CPU servers dedicated to handling tool calls and concurrent sub-agent tasks for Agentic AI. Analysts believe that by 2030, the AI Head Nodes segment will achieve the most significant growth within the CPU market.
Why Arm Wins: The Structural Monopoly Over AMD and Intel
UBS noted in a report that while Arm, AMD, and Intel, (INTC) the three leading global CPU suppliers, will all benefit from the proliferation of Agentic AI, Arm will be the primary beneficiary rather than the other two.
The report indicates that Arm's unit share in the server CPU market is approximately 15% in 2025, but UBS expects this figure to grow to 40%-45% by 2030; on a revenue basis, Arm's share is projected to further reach 50%-55% because the average selling price (ASP) for AI CPUs will be higher.
From an expert perspective, Arm's architecture offers several performance advantages over competitors, with power efficiency about 30% higher and memory efficiency about 20-30% higher, while smaller core designs provide clear advantages in latency and cost. However, the most critical advantage is that Arm already holds a dominant position among hyperscalers: Nvidia's (NVDA) Grace, Amazon's (AMZN) AWS Graviton 5 (192-core), Google's (GOOG) (GOOGL) and other leading hyperscale cloud providers' self-developed CPUs all adopt the Arm architecture.
For these reasons, UBS expects Arm to capture more than 75% of the head node CPU market by 2030. UBS analysts raised Arm's 12-month price target from $175 to $245, maintaining a "Buy" rating.
Compared to Arm, AMD's advantages are reflected in other areas, where its high core counts and multi-threading capabilities align well with Agentic AI's demand for high-speed, high-volume processing; Intel's stronghold remains in the traditional server market, where its x86 architecture is expected to maintain about an 85% share, but in the AI head node market, Intel's share is being rapidly eroded by Arm.
This content was translated using AI and reviewed for clarity. It is for informational purposes only.
Recommended Articles
