BofA Rise of the agents raising CPU TAM (again) to $210bn

US Semiconductors Rise of the agents: raising CPU TAM (again) to $210bn Price Objective Change

CPU TAM now $210bn on agentic inflection, +36% CAGR 12 August 2026

Following Q2 earnings and recent strong AI compute/memory demand trends, we raise Equity our CY30E server CPU TAM to $210bn+ (from ~$170bn). Notably, this implies nearly United States 5x growth off the ~$35bn CY25 level, and still 2.5x growth off a strong CY26E base Semiconductors given continued inflection across agentic workloads (TAM now +36% CAGR vs. +30% Vivek Arya prior). Critically, agentic inference is pushing the CPU‑to‑GPU ratio from ~1:4 in the Research Analyst BofAS training era to, ~1:2 for AI inference, and ultimately toward ~1:1 for agentic AI, as CPUs become the orchestration control plane. As a result, we now see CPUs representing Duksan Jang ~10% of the overall ~$2.2Tn data center systems TAM by CY30, versus just ~7% in the Research Analyst BofAS CY24‑25 training era. With agentic adoption still at low levels and AI compute demand near all‑time highs (per GPU spot rental prices, memory spot prices, capex outlook; see Michael Mani related report here), we continue to view agentic AI as a powerful demand accelerator Research Analyst BofAS that expands the CPU opportunity and lifts both x86 incumbents and ARM challengers. Liam Pharr Key debate: TAM substitution vs expansion Research Analyst BofAS Importantly, we view CPUs are additive to overall system TAM, expanding the compute opportunity as agentic workloads layer new CPU‑dense infrastructure alongside (not instead of) XPUs. Indeed, today's near‑record GPU rental and memory spot prices suggest an across‑the‑board compute shortage – and with CPUs sitting in the same racks and the same demand loop, that strength likely extends to CPUs too.

AMD remains top CPU pick, NVDA overall sector top pick See glossary on page 24. AMD remains our top CPU pick on its wide breadth of portfolio and dual leadership – highest‑frequency (compute/head node rack) and highest core/thread count (agentic AI). For instance, AMD’s Zen 6 Venice CPU features up to 256/512 cores/threads vs. INTC Diamond Rapids 192/192, NVDA Vera 88/176). We also highlight AMD’s strong Zen 6/2nm execution and supply visibility. We also like INTC given its foundry optionality, incremental Q3 supply ramping into Q4, and gen-on-gen ASP uplift. NVDA remains our top sector pick on full-stack system leadership. ARM remains the fastest share gainer, but we view much of the value accrues to the licensees (i.e. NVDA), with its own AGI CPU ramp still further out (CY28-30 for meaningful volume). QCOM CPU visibility is more limited, in our view, given multiple competition at its key customer.

Q2’26 CPU trends in detail Lastly we review Q2'26 CPU trends based on Mercury Research data: 1) For notebooks, Q2 units increased +16% QoQ, +10% YoY. INTC mostly caught up to AMD's growth as it improved availability of its 18A supplies, up +15% QoQ vs. AMD +18% vs. ARM +18%, though INTC ASPs significantly outpaced at +10% QoQ vs. AMD -4%. 2) For desktops, Q2 units -7% QoQ/-19% YoY, with INTC units -11% QoQ (vs. AMD -3%, ARM +11%). As in laptops, desktop ASPs also favored INTC (+10% QoQ) vs. AMD (-9%), driving INTC value share +110bps QoQ to 59.4%. 3) For servers, Q2 units +9% QoQ/+27% YoY, with INTC sales of $5.2bn up +29% QoQ (vs. AMD +21%, ARM est. +17%), driven by strong ASP gains from newer Granite Rapids mix shift. INTC server value share now 36.3% (+200bps QoQ), while AMD 29.2% and ARM 34.6% (both near record levels).

BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 28 to 33. Analyst Certification on page 27. Price Objective Basis/Risk on page 26.

Contents AI Compute Table of Hierarchy 3 $210bn+ Server CPU TAM 5 Market share outlook analysis 6 Traditional vs. AI Head Node (Compute) vs. Agentic Rack 7 CPUs now ~10% of Data Center Systems TAM 9 AMD: Reiterate…