A team of UBS (UBS) analysts led by Timothy Arcuri released an investor report on Wednesday, providing an in-depth analysis of the competitive landscape among relevant companies in the AI era. The report noted that with the continued acceleration of agentic AI technology, chipmakers AMD (AMD)and ARM (ARM)are both well-positioned to benefit significantly from growing demand for standalone CPU racks.
In the x86 processor space, AMD and Intel (INTC)constitute the primary competitive rivalry. UBS believes that Intel, with its x86 chips, can also participate in this market opportunity, but its medium-term growth potential depends on the extent of improvement in its high-core-count and performance roadmaps. In contrast, analysts hold a more optimistic view of AMD’s prospects. “As standalone CPU racks increasingly gain favor in the market, our sentiment toward AMD is gradually turning positive,” Arcuri stated in the report. “This is primarily driven by AMD’s strengths in core counts and multi-threading performance, as well as the deep and robust software ecosystem that the x86 architecture has accumulated across traditional software workloads, which are increasingly being integrated into agentic AI application scenarios.” UBS assumes a 60%-to-40% market share split between x86 and ARM in the standalone chip segment, and believes that given Intel’s roadmap and supply challenges, AMD is in a favorable position to capture the vast majority of incremental demand.
Based on the above assessments, UBS raised its price target for AMD from $455 to $670, while also lifting its CPU revenue forecast for calendar year 2027 from $21 billion to $23 billion, and its 2028 projection from $27 billion to $29 billion. At the same time, UBS also sharply increased its price target for ARM from $260 to $470.
Regarding ARM’s future performance, UBS maintained its previous view that by calendar year 2030, ARM architecture will capture approximately 70% of the total addressable market for head nodes, which is estimated at roughly 20 million units. Arcuri added that the real point of debate among investors centers on ARM’s revenue potential from standalone CPUs. Following a series of expert conference calls and industry discussions, UBS has grown more optimistic about ARM’s standalone CPU prospects, and has moderately raised its internal CPU revenue forecast for calendar year 2030 from approximately $13 billion to about $14 billion. In addition, UBS also found that beyond the opportunities in standalone CPUs, ARM’s royalty portion related to head-node applications is also expected to increase.
