Shares of Arm Holdings (ARM +4.86%) surged after the semiconductor company launched its own data central processing units (CPUs) and forecast it would hit $25 billion in total revenue in 2031, with $15 billion of that coming from its new CPUs.
This is a shift in Arm's business model, as it has historically licensed or sold access to its intellectual property (IP) through subscriptions to other chip designers. For example, its IP was used in Nvidia's Grace CPUs. However, the company is jumping into directly making CPUs as it projects the market will increase fourfold due to the rise of agentic artificial intelligence (AI).
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While Arm is projecting massive growth from this new initiative, it is not the only semiconductor stock set to benefit from the potential surge in demand for CPUs. Let's look at two others.
NASDAQ: ARM
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Advanced Micro Devices
While new competition usually isn't a positive, it comes in the context of Arm looking to grab a 15% share in a market that it sees growing by 4 times to $100 billion. That type of growth is undoubtedly also going to benefit the CPU data center market share leader, Advanced Micro Devices (AMD +7.91%). The CPU market is already supply-constrained, which has reportedly led to prices increasing by 10% to 15% this year. Meanwhile, both AMD and rival Intel (INTC +3.02%) have informed customers they are raising prices once again.
NASDAQ: AMD
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The expected soaring demand for CPUs also helps better frame the partnerships AMD has recently struck with both OpenAI and Meta Platforms. While those deals were for graphics processing units (GPUs), the inclusion of warrants tied to its stock price greatly incentivizes these two AI infrastructure behemoths to see AMD succeed. As a result, I'd fully expect AMD to be a big winner in data center CPUs in the coming years.
Intel
Intel has admittedly had a tough run operationally the past few years. Its full-year revenue in 2025 was flat while many other semiconductor companies saw revenue surge due to the AI infrastructure build-out. At the same time, the company's foundry business has struggled. Its foundry revenue has risen only modestly despite heavy investments, while it contributed $10.3 billion in operating losses last year.
NASDAQ: INTC
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That said, the company's data center and AI (DCAI) segment has seen solid growth, with management noting last quarter that the unit saw its fastest sequential growth in more than a decade. That momentum should continue with its CPUs in short supply and the company raising prices. Meanwhile, the expected surge in demand for data center CPUs due to the rise of agentic AI is likely to lift all ships, including Intel's.
If the company can straighten out its foundry business or spin out these assets, the stock could have strong upside from here. It would be particularly beneficial if the company's fabs could ramp up their own high-performance CPU production. That could solve a lot of its problems.
