Counterpoint Research analyst Parv Sharma said the global data center CPU market is entering a major transition as AI infrastructure demand reshapes competition among Intel Corp. (NASDAQ:INTC), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Arm Holdings Plc (NASDAQ:ARM)-based chip providers.
AI Infrastructure Reshapes CPU Demand
Sharma noted on Tuesday that the expansion of AI infrastructure has revived demand for data center CPUs as workloads increasingly shift from AI training to inference.
He noted that inference pipelines, orchestration layers, and head nodes still depend heavily on x86 computing power.
According to Sharma, the total addressable market for data center CPUs could expand to about $80 billion by 2028, representing a 2.9-fold increase from 2021 levels.
Agentic AI Changes CPU-GPU Dynamics
Sharma said the rise of agentic AI is increasing the importance of CPU resources in AI systems. He noted that CPU-to-GPU ratios are moving closer to 1:1, up from earlier levels near 1:8, as AI agents require more processing power for orchestration and real-time decision-making.
He added that CPUs now handle roughly 50% to 90% of the agentic AI workload, making them increasingly critical to next-generation AI infrastructure.
Intel, AMD And ARM Intensify Competition
Sharma said competition is accelerating across Intel, AMD, and ARM-based chips for cloud providers as vendors race to capture AI-optimized server demand.
The report tracks performance across Intel Xeon, AMD EPYC, and ARM-based custom silicon while also highlighting growing adoption of advanced manufacturing nodes such as Intel 18A, Intel 14A, and Taiwan Semiconductor Manufacturing Company Ltd.’s (NYSE:TSM) 3nm and 2nm technologies.
Sharma added that the market is increasingly shifting toward AI-optimized servers, creating new growth opportunities for vendors that can deliver higher-performance and more efficient CPU architectures.
Price Action: Intel shares were down 2.56% at $126.12, Advanced Micro Devices shares were unchanged 0.00% at $449.06, ARM Holdings shares were down 2.21% at $207.95 and Taiwan Semiconductor shares were down 1.43% at $398.76 during premarket trading on Tuesday, according to Benzinga Pro data.
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