AMD and ARM surge on CPU demand; UBS sees more upside
UBS raised price targets on AMD and ARM, citing surging CPU demand from hyperscalers for AI models, signaling further upside for chip stocks.
Shares of Advanced Micro Devices and ARM Holdings surged on Wednesday after UBS raised its price targets on both stocks, citing robust demand for central processing units from hyperscale cloud providers building out artificial intelligence infrastructure.
UBS analyst Timothy Arcuri increased his AMD price target to $200 from $180 and his ARM target to $175 from $150, representing potential upside of 15% and 20% respectively from current levels. The analyst noted that hyperscalers — large cloud operators like Amazon Web Services, Microsoft Azure and Google Cloud — are ordering increasing volumes of CPUs to power AI inference workloads, which require massive parallel processing. This trend benefits both AMD, which supplies its EPYC server chips, and ARM, whose architecture is used in custom processors like Amazon's Graviton. The surge in chip stocks reflects a broader rotation into semiconductor names as investors seek exposure to AI-driven demand beyond just graphics processing units.
For equities traders, the UBS call underscores the expanding opportunity in AI-related hardware. While much of the market's attention has been on GPU makers like Nvidia, the CPU segment is becoming a critical bottleneck as hyperscalers optimize total cost of ownership. Investors can track current pricing on AMD and ARM shares via NowPrice's stocks page. The next catalyst to watch will be second-quarter earnings reports from major cloud providers, which will provide further clarity on capital expenditure plans and CPU procurement trends. Any upside surprises could fuel additional gains in chip stocks, while a slowdown in cloud spending would pose a risk.