If you thought the AI boom was all about GPUs, think again. The humble CPU—the workhorse of computing—is staging a comeback, and it's about to get a whole lot more valuable.
According to Counterpoint Research analyst Parv Sharma, the global data center CPU market is entering a major transition. Speaking on Tuesday, Sharma said the total addressable market for data center CPUs could expand to about $80 billion by 2028, representing a 2.9-fold increase from 2021 levels. That's not just growth—that's a surge.
The catalyst? AI infrastructure. As AI workloads shift from training to inference, demand for CPUs is reviving. Inference pipelines, orchestration layers, and head nodes still depend heavily on x86 computing power, Sharma noted. In other words, even in an AI-driven world, you still need a brain to coordinate all those GPUs.
But the real game-changer is agentic AI. These are AI systems that can act autonomously—think AI agents that make decisions, execute tasks, and interact with other systems. Sharma said the rise of agentic AI is increasing the importance of CPU resources. CPU-to-GPU ratios are moving closer to 1:1, up from earlier levels near 1:8, as AI agents require more processing power for orchestration and real-time decision-making. He added that CPUs now handle roughly 50% to 90% of the agentic AI workload, making them increasingly critical to next-generation AI infrastructure.
That's a huge shift. For years, the narrative was that GPUs were the stars of AI. But as AI becomes more autonomous, the CPU is stepping back into the spotlight.
This transition is reshaping competition among the big chip players. Sharma said competition is accelerating across Intel (INTC), Advanced Micro Devices (AMD), and ARM-based chips for cloud providers as vendors race to capture AI-optimized server demand. The report tracks performance across Intel Xeon, AMD EPYC, and ARM-based custom silicon, while also highlighting growing adoption of advanced manufacturing nodes such as Intel 18A, Intel 14A, and Taiwan Semiconductor Manufacturing Company's (TSM) 3nm and 2nm technologies.
Sharma added that the market is increasingly shifting toward AI-optimized servers, creating new growth opportunities for vendors that can deliver higher-performance and more efficient CPU architectures.
So what does this mean for investors? The data center CPU market is no longer just a slow-growing commodity business. It's becoming a key battleground in the AI arms race. And with the market set to nearly triple in size over the next few years, the winners could see significant upside.
As for Tuesday's price action: Intel shares were down 2.56% at $126.12, AMD shares were unchanged at $449.06, ARM Holdings shares were down 2.21% at $207.95, and Taiwan Semiconductor shares were down 1.43% at $398.76 during premarket trading.
