Ai Employees Are Coming. 3 Stocks Wall Street Thinks Will…
1. Advanced Micro Devices
Graphics Processing Units (GPUs) have been instrumental in the training and deployment of AI systems, such as chatbots. However, much of the work AI agents do will require CPU (Central Processing Unit)-intensive workloads. AMD believes the shift to agentic AI will bring the CPU-to-GPU ratio from 1:4-8 to 1:1. In other words, there will be soaring demand for CPUs — perhaps something the kind we saw for GPUs in the early days of the AI revolution — and that’s great news for AMD, a leading company in this niche.
AMD has already started to capitalize on this. The company’s s have soared by 350% over the past year. AMD’s financial results have also been strong, powered by rising demand for CPUs. In the first quarter, AMD’s revenue grew by 38% year over year to $10.3 billion.
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NASDAQ: AMD
Advanced Micro Devices
Today’s Change
(-7.03%) $-38.12
Current Price
$504.40
Key Data Points
Market Cap
$885B
Day’s Range
$504.00 – $518.68
52wk Range
$114.71 – $546.44
Volume
229.9K
Avg Vol
37.5M
Gross Margin
47.09%
It could only be the beginning. AMD’s EPYC processors are among the market leaders, and the company has gained market in recent quarters. AMD also boasts a strong competitive advantage thanks to switching costs. AMD’s s might seem expensive. The company is trading at 73x forward earnings, versus the average of 24.4 for information technology stocks.
But given the company’s outstanding sales growth, market gains, and a strong position in the CPU space that could make it one of the biggest winners of the agentic AI boom, AMD might more than justify its valuation over the next five years.
2. Intel
Intel is AMD’s biggest competitor in the CPU market. So it stands to reason that it will also benefit from the agentic AI revolution. Intel’s s have also been on a tear, soaring 443% over the past 12 months. However, my view is that Intel is a far less attractive option than AMD. Here are three reasons why. First, Intel’s revenue isn’t growing nearly as fast. First-quarter sales climbed 7% year over year to $13.6 billion.
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NASDAQ: INTC
Intel
Today’s Change
(-2.45%) $-2.76
Current Price
$109.95
Key Data Points
Market Cap
$566B
Day’s Range
$107.90 – $111.26
52wk Range
$18.96 – $132.75
Volume
734.3K
Avg Vol
122.1M
Gross Margin
35.90%
Second, and relatedly, Intel has lost market while hitting manufacturing issues. These problems have plagued the company and harmed its financial results. Third, Intel’s s are trading at 137x forward earnings. At current levels, and given its meager top-line growth and the obstacles it has faced, Intel may be too expensive. While the company is a great stock to consider for the new agentic AI world order, investors should wait for a pullback.
3. Nvidia
Nvidia isn’t done cashing in on AI. GPUs will still be needed in the next stage of the industry, and Nvidia has a nearly insurmountable lead in the space, along with a wide moat from switching costs. So, it remains well-positioned to continue profiting from the AI boom. However, Nvidia is also looking to tap into the large CPU demand that the shift to agentic AI will create. The company is projecting $20 billion in stand-alone CPU revenue through the end of the year. That’s just a taste. The company sees a large, $200 billion total addressable market in this niche.
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NASDAQ: NVDA
Nvidia
Today’s Change
(-0.57%) $-1.22
Current Price
$213.28
Key Data Points
Market Cap
$5.2T
Day’s Range
$212.74 – $215.72
52wk Range
$138.83 – $236.54
Volume
765.3K
Avg Vol
166.6M
Gross Margin
74.15%
Dividend Yield
0.02%
Nvidia developed its Vera CPU, which can be sold as a stand-alone product or bundled with its Rubin GPU, precisely to take on this opportunity. And there lies one of the company’s advantages that can allow it to compete with AMD and Intel. Nvidia’s CPUs may not outperform AMD’s in raw performance, but they may still be a strong option (or even the best one) as part of an entire AI-powered system that already features the company’s best-in-class GPUs. My view is that Nvidia remains well-positioned to ride the AI tailwind in the long term, and the agentic AI boom will catapult the company higher.
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About the Author
Prosper Junior Bakiny is a contributing Motley Fool healthcare analyst covering biotechnology, pharmaceuticals, and healthcare stocks. Before The Motley Fool, Prosper wrote about investing topics ranging from stock market news to private equity for various companies. He holds a master’s degree in corporate finance from the University of Maryland Global Campus.
Stocks Mentioned
Advanced Micro Devices
NASDAQ: AMD
$506.56
(-6.63%)-$35.96
Motley Fool Stock Advisor’s Latest Pick
—% Avg Return
Intel
NASDAQ: INTC
$109.59
(-2.77%)-$3.12
Nvidia
NASDAQ: NVDA
$213.58
(-0.43%)-$0.92
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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