Nvidia, AMD, Arm stocks rally as BofA sees $170B agentic AI opportunity

Semiconductor stocks rallied on Thursday after Bank of America identified agentic AI as the next major growth catalyst for the industry, creating a potentially massive opportunity for chipmakers ranging from Nvidia and Advanced Micro Devices to Intel and Arm Holdings.

The brokerage's bullish outlook helped lift shares across the sector.

AMD rose about 6%, Intel gained more than 11%, Arm climbed over 8%, while Nvidia advanced roughly 1.4% in early trading.

The optimism follows discussions between Bank of America analysts, industry executives and customers at the firm's Global Technology Conference last week, where growing demand for AI infrastructure featured prominently.

BofA raises server market forecast

Bank of America significantly increased its estimate for the global server central processing unit market, forecasting it will exceed $170 billion by 2030, up from a previous estimate of $125 billion.

The revised forecast implies nearly fivefold growth between 2025 and 2030, representing a compound annual growth rate of approximately 37%.

Analyst Vivek Arya said the rise of agentic AI is expanding the role of CPUs in AI systems.

"The emergence of agentic AI represents a powerful demand accelerant that expands the CPU opportunity and lifts both x86 incumbents and ARM challengers," Arya wrote in a research note.

Unlike traditional generative AI applications, which typically respond to a single prompt, agentic AI systems perform multiple tasks simultaneously.

They can plan, reason, retrieve information, execute code, and make decisions across complex workflows.

CPUs regain importance in AI systems

While graphics processing units remain essential for training and running AI models, Bank of America believes CPUs will play a growing role in managing AI workloads.

According to Arya, many of the orchestration and decision-making functions required by agentic AI are "latency-sensitive, sequential, and I/O-intensive — making them better suited for CPUs."

That shift could broaden the beneficiaries of AI spending beyond companies focused primarily on AI accelerators.

AMD emerged as the brokerage's preferred CPU investment.

Bank of America raised its price target on AMD to $560 from $500, citing stronger expectations for both CPU and graphics processor demand.

The firm also pointed to the company's upcoming AI-focused event, where it is expected to showcase its next-generation Venice processor platform.

Arm Holdings also received a substantial target increase, with Bank of America lifting its valuation estimate to $335 from $245.

The brokerage cited the company's long-term opportunities in chiplet architectures and custom AI computing designs.

Intel earns rare double upgrade

Perhaps the biggest surprise was Intel, which received a double upgrade to Buy.

Bank of America assigned the stock a price target of $135, reflecting what it sees as improving prospects for Intel's CPU business as well as its foundry operations.

The upgrade comes after years of challenges for the company as it struggled to keep pace with rivals in AI-related markets.

The brokerage believes expanding demand for AI infrastructure could provide Intel with multiple avenues for growth over the coming years.

Nvidia remains top semi pick even as robotics play in focus

Bank of America continues to view Nvidia as its top overall semiconductor pick because of its "full-stack AI leadership."

Qualcomm, meanwhile, was kept at Underperform despite an expected AI CPU announcement at its June 24 AI Day, with BofA citing "tough competition and limited SAM."

Nvidia shares have fallen about 7.5% in the last one month.

"Nvidia shares have taken a tumble with the broader tech complex as expectations of higher US interest rates blow the froth off the market. However, the stock was already trading off its highs, largely due to the perception that the chip giant was ceding ground to some of its other global semiconductor competitors," said Kyle Rodda, market analyst at Capital.com.

However, investors are now increasingly examining the company's efforts beyond traditional AI chips.

Nvidia was among the investors participating in a funding round of up to $1.4 billion for German robotics company Neura Robotics, announced on Wednesday.

Neura said the funding would help it scale production to several million robots annually by 2030, highlighting Nvidia's growing interest in what many industry participants call physical AI.

The term encompasses robots, autonomous vehicles, and other intelligent machines capable of interacting with the physical world.

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