Three months ago, GPUs were all the rage, and the idea that CPUs could challenge GPUs when it comes to AI budgets was unfathomable. The shift in this perception is evident not only in management commentary, but also in CPU design companies and OEMs raising forecasts that are now 2X+ higher, as many of the largest players have stated they did not foresee the magnitude of the surge in CPU demand from agentic AI.
In just six months, AMD has issued a massive increase to its server CPU market forecast, nearly doubling its expected CAGR to 35%—estimating that the market will eclipse $120 billion by 2030. Arm made a similar announcement in March, projecting that the total addressable market (TAM) for data center CPUs will grow to over $100 billion by its fiscal year 2031 (roughly calendar year 2030). This would represent a more than 4X increase over its current TAM estimate of $24 billion, equating to a 33% CAGR.
An important shift is driving these forecasts as the AI market transitions away from chatbots, which saw a CPU-to-GPU ratio that was heavily weighted toward GPUs from 2023-2025. As we move into agentic AI, an Intel and Georgia Tech paper has stated that “tool-dominated agentic AI workloads are significantly bottle-necked” with CPUs consuming up to 88% of the end-to-end latency. The paper further concludes that “with better quality GPUs, the bottleneck can swiftly shift more towards CPUs.”
What Intel and Georgia Tech are referring to, is that to scale agentic AI efficiently, CPU orchestration capacity will need to catch up to GPU reasoning capacity to minimize latency and prevent GPU underutilization. The answer to this problem is increasing the CPU-to-GPU ratio in AI clusters to keep token costs down.
Below, I break down why CPUs are positioned to take a larger share of AI cluster bill of materials (BOM) and the explosion in demand we are already seeing. I examine server CPU forecasts that indicate this market will continue to grow rapidly over the coming years. Lastly, I look at the competitive dynamics and key players in this space, and how Nvidia is playing both sides of the CPU-GPU equation, and what front runners Intel and AMD are doing to maintain their lead.
Ultimately, CPUs have gone from an afterthought to becoming the AI trade’s next great bottleneck – and with AMD, Nvidia, Arm and Intel circling a market that is doubling nearly overnight, the only question left is which company walks away with the lion’s share.
Why Agentic AI Is Driving a Massive Shift to CPUs
Agentic workloads are structurally different from non-agentic workloads like chatbot queries, which is what has dominated the AI trade up to this point. Chatbots respond to simple requests and provide an output, moving at the pace of the human on the other side. Agents are far more complex, handling hundreds of concurrent tasks autonomously and reasoning through a problem to reach a conclusion, often with limited direction from humans.
The Intel and the Georgia Tech paper highlights why CPUs are becoming increasingly important as agentic AI proliferates. Researchers noted that while CPU-GPU systems are needed to serve the diverse responsibilities of agents, the “majority of the external tools responsible for agentic capability either run on or are orchestrated by the CPU.” This is not the case in non-agentic workloads, where GPUs are the workhorses that CPUs feed data to.
Why CPUs Handle Orchestration in AI Workloads
The key bottleneck this creates on AI infrastructure is orchestration—or the need to call tools, direct API requests, and coordinate tasks between dozens of independent agents. Orchestration is where CPUs thrive. GPUs continue to handle inference reasoning, but CPUs tell GPUs where, when, and how to allocate their resources.
As AI progresses over the next few years, inference demand is expected to explode—largely driven by agentic AI. Goldman Sachs estimates that by 2030, agentic AI will drive a 24X increase in total token consumption versus today to 120 quadrillion tokens per month. Its forecast shows agentic workloads accounting for over 80% of token consumption in 2030—dramatically higher than their share today.
TrendForce notes that today, the CPU-to-GPU ratio in AI data centers sits between 1:4 and 1:8. For agentic AI applications, TrendForce sees the CPU-to-GPU ratio moving “to between 1:1 and 1:2, significantly boosting market demand for CPUs.”
Other forecasts, like those from Arm, rely on the CPU core count per GW metric. This measures the number of CPU cores per unit of data center power, regardless of the discrete number of CPUs. It is the more accurate way to measure the shift in CPU demand as chip density is increasing, with upcoming generations featuring higher core counts per chip.
Notably, Arm CEO Rene Haas sees agentic AI driving CPU core demand as much as 4X higher to 120 million cores per GW, compared to around 30 million cores per GW today. Aside from the raw increase in core demand, packing more cores into each chip is a margin expansion opportunity for CPU designers.
CPU Shortages: Supply Constraints and Pricing Power
We are already seeing the CPU bottleneck start to play out through worsening CPU server shortages. Reuters reported in February that Intel has a substantial backlog of unfulfilled CPU orders, and that delivery times stretch as long as six months. It also noted delivery times for some AMD products of between eight and ten weeks. KeyBanc issued upgrades on Intel and AMD in January, noting that both firms were nearly sold out of CPU servers for 2026. At the time, KeyBanc noted ASP increases of 10% to 15%.
Intel and AMD Backlogs and Lead Times
It appears that the situation has become even more dire since, based on several reports from late May. Reuters now says that TikTok parent company ByteDance is working to accelerate its in-house CPU efforts, as Intel and AMD have raised prices by between 10% and 35% QoQ. ByteDance’s move suggests that it sees a prolonged CPU shortage, leading it to lean into this early-stage initiative. This adds weight to the structural increase in CPU demand implied by AMD’s forecast and shows the pricing power that CPU vendors are exerting.
Electronic equipment distributor Fusion Worldwide says that Intel distributors are only fulfilling around 40% of their yearly backlog allocations. It highlights lead times of 8 to 22 weeks domestically, with Asian customers waiting as long as 8 months. Overall, the firm estimates that Intel is under-shipping real demand by 20% “at best.” It notes that AMD’s EPYC CPUs are effectively sold out in 2026, with delivery windows stretching more than 30 weeks.
The Elec, a South Korean electronics industry trade publication, notes won-denominated price increases as high as 3X for some x86 (Intel and AMD) CPUs. This comes as Intel and AMD prioritize supply for U.S. hyperscalers—leaving little capacity for other customers. The Elec also said that the expected timeline for mass production of Intel’s next-gen Xeon 7 “Diamond Rapids” CPU has been delayed, moving from the second half of 2026 to the middle of 2027.
This data points to a shortage that is intensifying, putting pricing power into the hands of CPU vendors as they seek the highest-margin opportunities.
AMD Sees Record CPU Server Sales, TAM Estimate Doubles to $120B
The cause of these shortages is the rapid growth in server CPU demand seen at top players like AMD, and expectations that this market will grow much faster than it traditionally has over the coming years. AMD released its Q1 2026 results in early May, posting its fourth consecutive quarter of record server CPU revenue. Sales rose more than 50% YOY, with both cloud and enterprise end markets up over 50%. AMD expects growth to accelerate significantly in Q2, projecting server CPU revenue growth above 70% YOY, “with robust growth continuing through the second half of 2026 and into 2027.”
Citing this acceleration in demand and the structural increase on CPU compute requirements that agentic AI is putting on data center infrastructure, AMD has doubled its server CPU TAM estimate. Per CEO Lisa Su, the company anticipates that this will be an over $120 billion by 2030—growing by a 35% CAGR. In November, AMD’s server CPU growth TAM CAGR forecast was just 18%. AMD’s decision to double its market growth forecast and add $60 billion to its TAM in just seven months demonstrates how rapidly current demand signals are translating to long-term confidence among industry leaders.
Beth Kindig of the I/O Fund discussed in 2024 why AMD would be a winning AI stock and surpass Nvidia’s returns over a 3-year time frame. Since then, Nvidia returned 80% and AMD has returned 220%
Thinking about margins going forward, AMD noted at the Bank of America 2026 Global Technology Conference that two-thirds of its server CPU growth in Q1 and expected growth in Q2 are coming from unit increases. Thus, units rather than ASPs are the primary growth driver. Given the worsening supply and demand gap, it’s possible that ASPs could drive an increased share of growth—providing a further lever for margin expansion.
Server CPU Market Growth Forecasts Surging TAM
Notably, server CPU TAM forecasts among several Wall Street banks line up with AMD’s forecast. For reference, AMD’s forecast implies a 2025 TAM of just under $27 billion.
UBS projects that the market will grow from $31 billion in 2025 to $170 billion in 2030, or a 40.6% CAGR. It sees AI CPUs driving the vast majority of this growth, with the TAM increasing from $7 billion to $125 billion, or an 88% CAGR. Their forecast also includes a 56% increase in AI CPU ASPs over this period—implying a significant margin expansion opportunity.
CPU TAM Revised Higher by Analysts
Bank of America forecasts a TAM expansion from $43 billion in 2026 to $125 billion in 2030, or a CAGR of 30.6%, recently raising its 2030 estimate from $110 billion. While BofA’s growth rate is lower than AMD’s, this is likely because it accounts for the particularly high growth rates already being seen in 2026.
Citi breaks down its forecast into three buckets: general purpose CPUs, AI head nodes, and agentic CPUs. It sees the overall market growing from $29.3 billion in 2025 to $132 billion in 2030, or a 35% CAGR. Within this, general purpose CPUs grow by a 20% CAGR to $50.9 billion, and AI head nodes grow by a 21% CAGR to $21.1 billion. Citi estimates that agentic CPU growth will drastically outpace the rest of the market, hitting $59.4 billion in 2030 for a massive 185% CAGR. Overall, the estimates from these three banks circle around the 35% CAGR that AMD outlined.
Why Growth Rates Are Unprecedented for CPUs
These very high CAGR forecasts highlight why server CPU shortages are escalating. This market has historically experienced single-digit annual growth rates. Thus, the supply chain was not necessarily prepared for a scenario where customers suddenly look to procure CPUs at a drastically higher pace, and long-term expected growth rates soar in a matter of months.
AMD’s Goal: 50% Server CPU Market Share
As AMD looks to increase its share of the CPU market to over 50% by 2030, it is targeting all three of the CPU categories Citi described. This will come through its Venice family of EPYC CPUs, including Verano, its first EPYC CPU purpose-built for AI infrastructure. AMD has begun to ramp production of Venice, while it plans to launch Verano in 2027.
With this, AMD clearly expects CPUs to be a core growth driver over the coming years. If AMD achieves a 50% market share in the server CPU market, it would imply $60 billion in annual revenue. With server CPUs representing around half of data center revenue, this side of AMD’s business generated approximately $2.9 billion in revenue last quarter, or nearly a $12 billion run rate. Thus, hitting its $60 billion target would require a 5X increase in server CPU sales by 2030—an ambitious goal.
AMD vs Intel: x86 Market Share Dynamics
There are two ways to think about market share in server CPUs. Mercury Research is one of the key authorities that estimates share in this space, with their estimates often centered around the x86 market.
AMD is already very much in range of a 50% market share within x86. At its Investor Day, AMD noted that based on metrics from Mercury Research, its share of the server CPU market was around 40%. This lines up with Mercury’s estimate of AMD x86 market share of 41% at the time. Since then, AMD has gained considerable ground on Intel. Mercury Research estimates that AMD controlled 46.2% of x86 server CPU revenue share in Q1 2026 to Intel’s 53.8%. At this pace, AMD is well on its way to achieving a 50% market share in x86.
At Investor Day 2025, Lisa Su said AMD has a clear path to capturing more than 50% of server revenue market share, up from 40% today, alongside a 50% data-center CAGR and a goal of 40% PC revenue share.
AMD, Intel and Arm Market Share Dynamics
Arm estimates that in terms of chip value, it held 20% of the cloud compute market share at the end of its fiscal year 2025, which ended in March 2025. Considering Mercury’s estimates on x86, or the 80% of the market that is not Arm-based, these figures imply overall market shares of 43% for Intel, 37% for AMD, and 20% for Arm. However, note the figures from Arm are stale.
