Processor market expected to expand significantly
Wolfe Research believes the rapid adoption of artificial intelligence technologies will create a major growth cycle for the processor industry, forecasting that the global CPU opportunity will expand by roughly 30% through 2028.
The firm argues that access to advanced manufacturing capacity, particularly at TSMC, may prove more important than pure product performance in determining winners and losers across the sector.
Orchestration computing emerges as a major growth theme
One of the strongest opportunities identified by Wolfe is the emergence of orchestration CPUs, which are expected to become increasingly important as AI infrastructure evolves.
The firm expects demand to accelerate sharply by 2028 as Nvidia’s Rubin Ultra architecture pushes CPU-to-GPU deployment ratios toward parity.
Despite this opportunity, Wolfe believes the segment will remain largely controlled by companies that already dominate GPU and accelerator markets.
ARM expected to capture growing influence
Wolfe also sees substantial momentum behind ARM-based processors within agentic AI workloads.
Thanks to advantages in energy efficiency and parallel processing performance, ARM architectures are projected to secure between 50% and 75% of the agentic CPU market.
If ARM captures half of that segment, its share of the broader CPU industry could rise from approximately 15% today to 45% by 2028.
AMD positioned for outsized gains
Among leading semiconductor companies, Wolfe views Advanced Micro Devices (NASDAQ:AMD) as the standout beneficiary of the AI-driven CPU expansion.
Server CPU revenue is projected to increase from $17 billion in 2026 to $44 billion by 2028, creating a significant earnings opportunity.
The firm estimates AMD’s earnings power could reach between $25 and $30 per share by 2028.
Intel faces a more challenging path
Intel (NASDAQ:INTC) is expected to benefit from broader industry growth, but Wolfe believes the company will continue to lose market share across multiple categories.
Competitive pressure from internally developed processors such as Google’s Axion, combined with growing adoption of ARM-based alternatives, is expected to weigh on Intel’s position.
Nevertheless, the firm still projects Intel’s server CPU revenue to nearly double by 2028.
Nvidia remains the dominant force
Nvidia (NASDAQ:NVDA) is expected to remain the largest player in the market, with CPU shipments surpassing four million units this year.
Agentic CPU revenue alone could climb from $6.6 billion in 2026 to nearly $25 billion by 2028.
However, Wolfe notes that CPUs will represent only a relatively small contributor to Nvidia’s earnings compared with its dominant accelerator business.
Arm Holdings gains from several trends
Arm Holdings (NASDAQ:ARM) could benefit from multiple sources of growth, including royalties from datacenter processors, increasing adoption of ARM-based AI systems and revenue from future proprietary chip initiatives.
Wolfe estimates that these opportunities could support earnings power of approximately $4.50 per share by 2028.
AI demand supports the broader semiconductor ecosystem
The anticipated expansion of AI computing is expected to benefit not only chip designers but also semiconductor manufacturing equipment suppliers.
Wolfe forecasts roughly 20% growth in wafer demand over the next two years, although GPUs and AI accelerators are still expected to account for the majority of advanced manufacturing requirements.
Overall, the firm sees artificial intelligence as a powerful catalyst that could reshape the competitive landscape of the CPU industry over the remainder of the decade.
Leave a Reply