AMD Outshines ARM in Agentic AI Semiconductor Stocks

Agentic artificial intelligence (AI) is on the rise, with Meta Platforms' personal Muse AI agent becoming the most-downloaded app on the Apple App Store after its launch this month. The enterprise agentic market for AI is expected to grow at a compounded annual growth rate of over 48% through 2033 to $83.4 billion. This increased demand has led to a surge in the need for data center server central processing units (CPUs). Two leading stocks in this area are Advanced Micro Devices (AMD) and Arm Holdings (ARM).

However, only one of these stocks is recommended as a buy: AMD. The company is a leader in the space and has consistently taken share from market-share leader Intel. It projects that the data center CPU market will rise to $220 billion over the next few years and that it can take 50% share.

AMD has developed purpose-built CPUs for agentic AI, combining high core counts and fast memory access. Cores act like individual workstations where computing tasks get executed, so a higher CPU core count can help a system run and manage more AI agents concurrently. Higher-core CPUs also come with higher prices.

In addition to its CPU opportunity, AMD has a big chance in the inference market with its graphics processing units (GPUs). It has already signed two large $100 billion deals with OpenAI and Meta Platforms, and a third sizable deal with Anthropic. This combination makes the stock a buy.