Intel’s latest earnings report has revealed a significant surge in demand for central processing units (CPUs), driven by the race among companies to enhance their artificial intelligence (AI) capabilities. This unexpected demand has resulted in a noteworthy increase in Intel’s stock, prompting investors to also turn their attention to Advanced Micro Devices (AMD), which saw its shares rise by over 12%.
The surge in AMD shares comes as analysts on Wall Street reacted to Intel’s impressive CPU performance, leading to a wider belief that the positive results could extend to other CPU manufacturers. Gil Luria, an analyst at D.A. Davidson, emphasized in a note that the CPU market is experiencing a resurgence as it adapts to new computational demands brought about by AI applications. He noted that the shift away from traditional graphics processing units (GPUs) could lead to a revitalized focus on CPU technology.
Luria has upgraded AMD’s stock rating from neutral to buy, raising the company’s expected revenue and gross profit margins for 2026. He also raised the price target for AMD shares to $375, indicating a 22% upside potential compared to their closing price the day before.
Following Intel’s announcement of stronger-than-expected guidance for the second quarter, analysts across the board have taken note of the burgeoning CPU demand. Citi analyst Atif Malik mentioned that Intel anticipates double-digit growth in server CPU units by 2026, a notable increase from previous expectations of minimal growth just six months prior. Malik has also upgraded Intel’s rating from neutral to buy.
The broader implications for CPU manufacturers and data center equipment providers appear promising, with the potential for substantial advancements in AI infrastructure. Roth analyst Suji Desilva observed that this uptick in CPU demand has led to an increase in Intel’s price target, aligning it more closely with its peers in the AI infrastructure sector, including AMD.
However, concerns linger about Intel’s competitive position against AMD. Barclays analyst Tom O’Malley expressed skepticism regarding possible market share losses for Intel to its rival, calculating a potential downside scenario based on projected earnings per share for 2027. O’Malley’s analysis reflects a cautious outlook as Intel’s stock traded at around $81 early Friday.
Overall, the developments in the CPU market, sparked by Intel’s earnings report, may signify a pivotal shift in the technological landscape as AI continues to require more robust and versatile computing solutions.
