Bank of America has substantially increased its forecast for the 2030 server CPU total addressable market (TAM), moving the estimate from $125 billion to in excess of $170 billion. The firm attributes the change to the emergence of agentic AI, which it says materially expands CPU demand and supports higher price objectives for a number of semiconductor companies.
Analyst Vivek Arya laid out the reasoning in a note on Thursday, describing agentic AI as a catalyst that enlarges the CPU opportunity set and benefits both x86 incumbents and ARM challengers. BofA quantified the expansion as implying a 37% compound annual growth rate for the period from 2025 through 2030.
Reflecting those assumptions, BofA raised its price target on Advanced Micro Devices to $560 from $500, citing stronger CPU and GPU estimates. Arm Holdings saw its target lifted to $335 from $245, with the bank pointing to increased long-term potential for chiplet architectures. Intel received a two-notch upgrade to Buy and was set a $135 price target, a move BofA said reflects both near-term CPU opportunities and longer-term foundry prospects.
BofA drew a distinction between agentic AI and traditional generative AI workflows. According to the note, agentic AI shifts processing from single prompt-response interactions to multi-step systems that plan, reason, retrieve information, and execute code concurrently. While accelerators remain important for inference workloads, the bank highlighted that orchestration and decision-making tasks are latency-sensitive, sequential, and I/O-intensive - characteristics that favor CPUs.
Within the bank's coverage, AMD was named the top CPU pick based on incumbency, the strength of its product pipeline, and anticipation around an upcoming AI day tied to the Venice launch. Across the broader AI and semiconductor landscape, NVIDIA remained BofA's top overall sector pick, which the firm credited to the company's full-stack AI positioning.
Qualcomm was held at Underperform despite expectations for an AI CPU announcement at its June 24 AI Day; BofA cited tough competition and a limited serviceable addressable market as the rationale for that stance.
Context and market signals
The note from BofA signals a material upward revision to long-term CPU demand assumptions driven by a specific AI architecture - agentic AI - which the bank characterizes as both computation- and orchestration-intensive. The firm translated that view into higher valuations and target prices for several names across the semiconductor sector while differentiating between companies positioned to capture CPU-led workloads and those more reliant on accelerators.