Nvidia Just Delivered Bad News for AMD and Intel

Nvidia recently released strong second-quarter earnings, surpassing Wall Street expectations and raising guidance for the third quarter. The company's CFO, Colette Kress, announced a projected 70% annual revenue growth in fiscal 2028, far exceeding the 44% forecast by analysts. This growth is fueled by the rise of agentic AI, which has led to a surge in demand for central processing units (CPUs) used to manage AI agents.

Nvidia has responded by introducing its stand-alone CPU, Vera, designed for AI agent tasks, which it claims are 1.8 times faster than industry standards and provide fivefold the bandwidth per watt compared to other data center CPUs. Nvidia's CEO, Jensen Huang, stated that the company anticipates more than doubling its CPU revenue in fiscal 2028.

While this presents challenges for AMD and Intel, who reported $6.3 billion and $6.7 billion in data center revenue respectively in the second quarter, the growth of agentic AI could create opportunities for these companies as well. Bank of America analyst Vivek Arya recently raised his estimates for the total addressable market (TAM) for server CPUs from $170 billion by 2030 to $210 billion, citing the increasing use of AI agents.