Intelligent body AI triggers independent CPU rack demand! UBS Group AG significantly raises AMD (AMD.US) and Arm (ARM.US) target prices, Intel Corporation's roadmap faces a test

UBS Group AG stated that with the continuous acceleration of agentic AI development, both AMD (AMD.US) and ARM (ARM.US) are expected to benefit from the increasing demand for independent CPU architectures. Intel Corporation (INTC.US) can also play a role with its x86 chips, but the mid-term upside depends on its high core count and performance roadmap improvements. In the x86 processor field, AMD is the main competitor of Intel Corporation. The UBS Group AG analyst team led by Timothy Arcuri stated in an investor report on Wednesday, "As independent CPU architectures become more favored, our attitude towards AMD is gradually becoming more positive, as it has advantages in core count, multithreading, and x86 has a long and powerful software ecosystem in traditional software workloads, which are increasingly becoming a part of agentic AI workloads." "We now assume that in the market segment of independent chips, the market shares of x86 and ARM are divided as 60% to 40%, and given Intel Corporation's roadmap and supply challenges, we believe that AMD is in a favorable position to capture the majority of this additional demand." UBS Group AG raised AMD's target price significantly from $455 to $670. The institution also increased the expected CPU revenue for the natural year of 2027 from $21 billion to $23 billion, and for 2028 from $27 billion to $29 billion. At the same time, UBS Group AG raised Arm's target price significantly from $260 to $470. "We maintain our previous view that by the natural year 2030, ARM architecture will capture about 70% of the total addressable market (TAM) of approximately 20 million nodes - in our view, the real debate among investors is the revenue potential of ARM's independent CPU," added Arcuri. The bank stated, "After a series of expert conference calls and industry discussions, we have become slightly more optimistic about its prospects in the independent CPU field, and have slightly raised ARM's internal CPU revenue expectations for the natural year 2030 from approximately $13 billion to about $14 billion. ARM's core competitiveness lies in latency and efficiency - which aligns well with the needs of hyperscalers; however, current limitations in core count/throughput will restrict the use of ARM's internal first-generation general AI in independent AI architectures, as workloads for such applications need to scale across more cores on a single machine." In addition to the opportunities for ARM in the independent CPU field, UBS Group AG found that the royalty fees for Arm's application in node applications are also expected to increase. "We expect that, driven by higher core counts and increased single-core royalty fees, the royalty fee rate per device will increase (in our bullish scenario, the latter may increase by over 2 times or even 3.5 times)," Arcuri noted.