US Semiconductors: Core Wars Q2 Preview: insatiable demand for servers vs. not-so-much others

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US Semiconductors: Core Wars Q2 Preview: insatiable demand for servers vs. not-so-much others

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US Semiconductors

Core Wars Q2 Preview: insatiable demand

for servers vs. not-so-much others

Price Objective Change

Server demand exceptional, PC/phone units challenged 13 July 2026

Key CPU vendors (AMD, INTC, ARM, QCOM) are reporting CQ2 earnings in the coming Equity

weeks. While PC and smartphone units remain challenged (each down 10-15%+ YoY in United States

2026E), demand for AI server CPUs remains strong, driven by increasing agentic AI Semiconductors

adoption and capex visibility. Key debates include: 1) server CPU TAM (current $120- Vivek Arya

200bn or more?), 2) ASP trends in both PC/servers and durability of price increases, 3) Research Analyst

CPU content per AI system (and by generation), 4) supply visibility against quickly rising BofASvivek.arya@bofa.com

demand, 5) server share outlook amongst multiple new x86 and ARM variants. Duksan Jang

Research Analyst

The CPU debate: Higher frequency vs. higher core count BofASduksan.jang@bofa.com

In the agentic AI era, system bottleneck is increasingly not GPU FLOPS, but rather CPUs Michael Mani

which handle tool calls, code execution, orchestration, KV-cache management, etc. Research Analyst

BofAS

Therefore, CPU capability has become critical in overall system perf and reducing idle michael.mani@bofa.com

GPU time. Yet, the debate on which CPUs work best in AI remains. NVDA argues Liam Pharr

highest-frequency CPU cores are important: these CPUs are optimized particularly for Research Analyst

latency which impact completion of tool calls. AMD argues throughput and concurrency liam.pharr@bofa.com

matter more than pure single-thread speed, argues rack-scale perf as a better measure

of capability.