Investing.com -- Bank of America (BofA) has raised its outlook for the server CPU market, projecting it to grow from roughly $43 billion in 2026 to $125 billion by 2030, up from a prior estimate of $110 billion, a compound annual growth rate (CAGR) of 31%, driven by the rising role of processors in agentic AI workloads.

AMD and Nvidia are the bank’s top picks to benefit from the strong demand.

The upgrade reflects BofA’s view that CPUs are taking on a more significant role in the next phase of AI deployment. While GPUs dominated the training era, agentic AI — where systems plan, retrieve context, call tools, manage state, and interact with databases — is "structurally even more CPU-intensive," analysts led by Vivek Arya wrote.

In this environment, CPUs become "the control plane of AI inference," handling orchestration and memory management across increasingly complex multi-step workflows, they noted.

The team argues this represents an expansion of the overall data center market, not a substitution. CPU-only racks designed for tasks like retrieval-augmented generation, vector databases, agent orchestration, and smaller model inference are expected to address workloads that GPU racks previously could not serve cost-effectively.

Nvidia’s upcoming Vera CPU rack, set to launch alongside its Vera Rubin platform in the second half of 2026, is cited as an example, with a full Vera Rubin pod potentially reaching a roughly one-to-one ratio of CPUs to GPUs.

From a market share perspective, BofA projects Intel and AMD will each hold around 28% of server CPU value by 2030, while ARM-based custom designs — including AWS Graviton, Google Axion, and Microsoft Cobalt — are expected to be the fastest gainers, reaching roughly 37% share from about 15% today.

ARM merchant CPUs are seen adding another 7%, while Intel is forecast to continue losing share in both cloud and enterprise segments.

AMD remains BofA’s preferred x86 name, with the bank modestly raising its estimates and maintaining a $500 price objective. Nvidia is the other preferred name, given its ability to integrate CPUs within a full-stack architecture spanning compute, networking, storage, and memory. BofA rates both stocks Buy.

"While all major CPU vendors potentially stand to benefit (with double-digit sales CAGR), our top picks include: AMD (maintain share in cloud, take share in x86 enterprise) and NVDA (to start ramping standalone Vera CPUs, integrate as part of full-stack architecture)," the note states.

Despite the strong growth trajectory, the analysts highlight that server CPUs will still represent only about 5-6% of total data center systems spending by 2030, with AI accelerators remaining the dominant component at roughly $1.2 trillion of an overall $1.7 trillion AI data center market.