AI expected to drive a new phase of CPU demand
Wolfe Research believes the rise of agentic artificial intelligence and orchestration computing will create a significant expansion in processor demand, projecting that the total addressable CPU market will grow by approximately 30% by 2028.
The firm argues that access to manufacturing capacity at Taiwan Semiconductor Manufacturing Company is likely to be a more important factor in determining competitive success than raw chip performance over the next several years.
Orchestration CPUs poised for strong growth
According to Wolfe, orchestration processors are expected to experience rapid expansion by 2028 as Nvidia’s Rubin Ultra platform moves toward a CPU-to-GPU ratio of roughly 1:1.
Despite the anticipated growth, Wolfe expects the orchestration CPU segment to remain largely dominated by companies that already control GPU and accelerated computing ecosystems.
The firm’s forecasts for orchestration CPU volumes are based on GPU and XPU shipment assumptions incorporated into its proprietary Wolfe Accelerator Model.
ARM designs expected to capture a larger share of AI computing
Within the developing market for agentic AI processors, Wolfe Research forecasts that ARM-based architectures will secure between 50% and 75% market share.
The research firm believes ARM designs offer advantages in energy efficiency and multi-threaded processing, while x86 architectures retain strengths in single-threaded performance.
Under Wolfe’s base-case scenario, where ARM captures half of the agentic CPU market, ARM’s share of the broader CPU industry would increase to roughly 45% by 2028 from approximately 15% today.
AMD identified as the biggest potential winner
Wolfe Research views Advanced Micro Devices (NASDAQ:AMD) as the company with the most significant upside relative to both its valuation and current scale.
The firm projects AMD’s server CPU revenue will rise from approximately $17 billion in 2026 to $44 billion by 2028.
According to Wolfe, that growth could add around $7 per share in earnings compared with 2025 levels, boosting AMD’s overall earnings potential to between $25 and $30 per share by 2028.
Intel expected to face continued share erosion
Although Wolfe forecasts expansion across the overall CPU industry, it believes Intel (NASDAQ:INTC) will continue to lose market share in several important segments.
The firm expects pressure in orchestration CPUs as Google increasingly adopts its internally developed Axion processors, while Intel is also projected to lose ground in traditional server CPUs and emerging agentic AI workloads.
Nevertheless, Intel’s server CPU revenue is still expected to increase from $22.6 billion in 2026 to $41.5 billion in 2028.
Assuming a 30% operating margin on incremental revenue, Wolfe estimates this growth could contribute approximately $1 in additional earnings per share relative to 2025.
Nvidia expected to lead CPU shipment expansion
Wolfe forecasts Nvidia (NASDAQ:NVDA) will ship more than four million CPUs this year, including roughly 1.3 million Vera agentic processors, with the majority expected to be delivered during the fourth quarter.
The firm estimates agentic CPU revenue could reach $6.6 billion in 2026, increase to $14 billion in 2027 and rise further to $24.6 billion in 2028.
These forecasts are based on an average selling price of approximately $5,000 per server CPU.
While Nvidia is expected to command the largest share of the market, Wolfe notes that CPUs will have a relatively limited impact on earnings because of the company’s much larger accelerator business.
The firm estimates CPU products could add roughly $0.50 per share in earnings compared with 2025.
Arm Holdings positioned for multiple growth drivers
Wolfe Research also sees meaningful upside for Arm Holdings (NASDAQ:ARM), supported by its exposure to orchestration processors, growing adoption of ARM-based agentic CPUs and future opportunities in proprietary silicon products.
Using its assumption of a 50% share of the agentic CPU market by 2028, Wolfe projects royalty revenue of approximately $1.5 billion in 2027, increasing to $2.5 billion in 2028.
The firm also forecasts ARM-generated silicon revenue of around $2 billion in 2028.
According to Wolfe’s estimates, datacenter CPU royalties could contribute roughly $1.25 per share in additional earnings compared with 2025, while silicon-related activities could add another $0.30 per share.
Combined, these contributions could support earnings power of approximately $4.50 per share by 2028, although Wolfe cautions that the stock continues to trade at a premium valuation.
Semiconductor manufacturers also stand to benefit
The anticipated increase in CPU demand is expected to translate into approximately 20% wafer growth over the next two years for semiconductor equipment manufacturers.
Even so, Wolfe expects GPUs and XPUs to remain the primary drivers of demand for advanced manufacturing capacity, with AI accelerators continuing to account for the largest share of leading-edge wafer production.