Bank of America Eyes AI Chip Boom

Bank of America has substantially increased its forecast for the server CPU total addressable market by 2030, projecting it to surpass $170 billion, up from a previous estimate of $125 billion. Analyst Vivek Arya noted that the advent of agentic AI is acting as a powerful demand accelerant, potentially increasing CPU requirements by nearly fivefold.

This surge in demand is expected to drive a 37% compound annual growth rate for CPUs between 2025 and 2030. Consequently, price objectives for several semiconductor firms have been elevated. AMD's price target was raised to $560 from $500, ARM's to $335 from $245, and Intel saw a double upgrade to a Buy rating with a $135 price target, recognizing both near-term CPU strength and long-term foundry prospects.

Agentic AI's architecture differs from traditional generative AI by employing a multi-step workflow that includes planning, reasoning, information retrieval, and code execution. While accelerators are vital for inference, Arya highlighted that the sequential and I/O-intensive nature of orchestration and decision-making tasks makes them well-suited for CPUs, a shift that BofA sees benefiting incumbents like AMD, which is named the firm's top CPU pick.

Nvidia continues to be the firm's favored overall sector pick due to its comprehensive AI leadership. However, Qualcomm remains at Underperform, despite an anticipated AI CPU announcement, as BofA cited significant competitive pressures and a limited serviceable available market.