Bank of America (BAC) has raised its outlook for the server CPU market and named AMD (AMD) its top CPU pick and Nvidia (NVDA) its overall sector pick as AI agents expand the role of CPUs in data centers. The bank's analyst Vivek Arya now expects the server CPU total addressable market to exceed $210 billion by 2030, up from about $170 billion previously. The new forecast is well above BofA's earlier estimate of about $170 billion.

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Arya, who ranks #166 among the thousands of Wall Street analysts, now expects the server CPU market to grow at a 36% compound annual rate, up from his earlier forecast of 30%. He sees the rising use of AI agents as a major driver of this stronger growth outlook.

Why AI Agents Could Boost CPU Demand

BofA expects the balance between CPUs and GPUs to shift as AI workloads evolve. AI training has relied heavily on GPUs, while agentic AI could increase the role of CPUs in managing tasks, coordinating workloads, and handling data.

The bank expects the CPU-to-GPU ratio to move from about 1:4 during the training era toward roughly 1:1 for agentic AI. BofA described CPUs as the "orchestration control plane" for these workloads.

As a result, BofA expects CPUs to account for about 10% of the $2.2 trillion data center systems market by 2030. That compares with roughly 7% during the training era.

Why BofA Likes AMD and Nvidia

BofA expects AMD to benefit from its strength in both frequency and core count. The bank sees AMD as well positioned to gain from rising CPU demand in cloud and enterprise servers.

Meanwhile, Nvidia remains BofA's overall semiconductor sector pick. The bank sees an advantage in Nvidia's ability to combine CPUs, GPUs, networking, and memory into complete AI systems.

Nvidia is set to report its second-quarter fiscal 2027 results on August 26. Wall Street expects Nvidia to report earnings per share of $2.08 for Q2 FY27, compared to $1.05 in the prior-year quarter. Revenue is estimated to rise 97% year-over-year to $91.88 billion on AI-driven demand tailwinds.

Beyond AMD and Nvidia, BofA expects AI infrastructure spending to expand rather than replace existing data center demand. New CPU-heavy systems for workloads such as vector databases, AI agents, and retrieval could add to server CPU demand. At the same time, BofA expects AI accelerators to remain the largest part of infrastructure spending. BofA expects the broader data center systems market to reach $2.2 trillion by 2030.

Which Is the Best AI Chip Stock, According to Analysts?

Using TipRanks' Stock Comparison Tool, Nvidia appears to have the higher upside potential, with analysts expecting about 37% upside, compared with roughly 30% upside for Advanced Micro Devices.

Investors can dig deeper to decide which AI chip stock best fits their strategy. Below is a screenshot for reference.