Raymond James has upgraded Advanced Micro Devices (NASDAQ: AMD) to Strong Buy from Outperform, citing the company’s growing exposure to artificial intelligence and the expanding server CPU market.
The investment firm believes rising demand from AI-driven workloads could significantly reshape the data center processor industry over the coming years.
Server CPU Market Could Reach $201 Billion by 2030
Raymond James expects the global server CPU market to expand at a 44% compound annual growth rate over the next five years, potentially reaching around $201 billion by 2030.
The firm’s forecast breaks the market into three major segments:
- $33.5 billion from traditional data center CPUs
- $83 billion from AI head-end CPUs
- $85 billion from CPUs supporting agentic AI workloads
The outlook reflects expectations that artificial intelligence applications will require substantially more computing power across data centers.
Raymond James Sees AMD as a Major Beneficiary
Analyst Simon Leopold said AMD stands out because of its combination of earnings exposure, data center positioning and potential market-share gains.
According to Raymond James, AMD is particularly well placed to benefit as businesses increase their use of AI infrastructure and CPU-intensive workloads.
The company has been expanding its presence in data centers while competing more aggressively across the server processor market.
Agentic AI Could Become a Key Growth Driver
Raymond James identified agentic AI as one of the most important new sources of CPU demand.
Agentic AI systems can continuously perform tasks such as data retrieval, database queries, workflow coordination, sandbox operations and tool execution. Many of these processes depend heavily on CPUs rather than solely on graphics processors.
The firm said demand may therefore depend increasingly on factors such as the number of active AI agents, workflow duration and simultaneous workloads.
This differs from traditional AI demand metrics, which often focus more heavily on model size, parameters or token generation.
AMD Forecast Remains Within Reach
Raymond James’ base-case estimate of a $201 billion server CPU market is broadly aligned with Nvidia’s long-term framework of approximately $200 billion.
However, it remains below AMD’s own estimate of roughly $220 billion.
Raymond James said its forecasts could move closer to AMD’s projection under a more aggressive scenario where adoption of agentic AI accelerates faster than currently expected.
Higher AI Usage May Not Fully Translate Into CPU Shipments
Despite its bullish outlook, Raymond James warned that stronger workloads will not necessarily lead to an equal increase in processor shipments.
Higher hardware utilization, improving software efficiency, custom chips and workload offloading could absorb some of the additional computing demand.
As a result, growth in AI activity may exceed the actual increase in physical CPU sales.
Arm and Intel Face Different Opportunities
Raymond James also assessed several other semiconductor companies exposed to the server market.
Arm (NASDAQ: ARM) could benefit from rising server royalty revenue and increased adoption of custom silicon.
Meanwhile, Intel (NASDAQ: INTC) remains exposed to potential market-share losses, even if the broader server CPU market continues to expand.
AMD, however, remains Raymond James’ preferred name within the sector due to its combination of data center growth, AI exposure and improving competitive position.
