Shares of Advanced Micro Devices and ARM Holdings are rising as UBS analysts highlight a surge in demand for central processing units from hyperscale cloud providers.
The bank argues that the shift toward CPU-intensive workloads for AI models is creating a new growth vector for these chipmakers, distinct from the graphics processing unit cycle that has dominated the sector for years.
The brokerage sees further appreciation potential for both stocks, suggesting that the market has not yet fully priced in the scale of CPU orders flowing from major tech firms.
This perspective adds to a broader rally in the semiconductor space, where investors are increasingly looking for diversification within the AI infrastructure build-out.
The upgrade comes as the sector continues to see strong momentum.
Intel shares recently climbed sharply following upgrades from Bank of America and positive commentary from CNBC’s Jim Cramer, while software stocks also saw gains after Nvidia CEO Jensen Huang announced new chip plans for personal computers.