This article first appeared on GuruFocus.
AMD (NASDAQ:AMD) and Arm (NASDAQ:ARM) could benefit as agentic AI drives more demandfor standalone CPU racks, according to UBS.
UBS raised its AMD price target to $670 from $455, saying the company is well positioned because of its core count, multithreading strength and the x86 software ecosystem. The firm now expects AMD's CPU revenue to reach $23 billion in 2027 and $29 billion in 2028, up from prior estimates of $21 bilion and $27 billion.
The firm said standalone CPU racks could split 60% x86 and 40% Arm, with AMD likely to capture an outsized share given Intel's roadmap and supply challenges. Intel can still participate, but UBS said mid-term upside depends on improving high core-count performance.
UBS also lifted its Arm price target to $470 from $260. The firm expects Arm architectures to hold about 70% of a 20 million-unit head-node market by 2030, supported by latency, efficiency and rising royalty rates.