On Monday (NASDAQ:MNDY), Bank of America (BofA) provided an analysis of third-quarter CPU trends, indicating a contrasting performance between Advanced Micro Devices (NASDAQ:AMD) and Intel Corporation (NASDAQ:INTC). The research, based on data from Mercury Research, showed AMD making significant market share gains over Intel.
During the third quarter, PC unit shipments saw a modest increase of 1% quarter-over-quarter (QoQ) and year-over-year (YoY). This was despite the period typically being strong for sales. Intel experienced a 3% QoQ decrease in shipments, failing to meet market demand, while AMD's shipments rose by 15% QoQ.
AMD's growth was attributed to its larger mix of consumer and desktop products in Western markets, as opposed to Intel's focus on China, enterprise, and notebook segments, which have shown weaker performance.
Average selling prices (ASPs) for CPUs from both companies increased by 5% QoQ, potentially boosted by new AI PC products. In the server segment, Q3 shipments grew by 7% QoQ and 10% YoY, following two quarters of shipments lagging behind server sell-through, signaling a normalization of CPU inventories.
Looking ahead, BofA expects average selling prices to expand into the fourth quarter of 2024 and into 2025, driven by new products with higher core counts.
AMD's market share is projected to continue its upward trajectory, with expectations to reach approximately 27% of total CPU revenue share by the calendar year 2026, up from a previous estimate of less than 25% and significantly higher than the 19% share in the calendar year 2023.
The analysis also highlighted the rising presence of Arm-based vendors in the server CPU market, with their unit share climbing to 7.0% in the third quarter, up from less than 5% in 2023 and around 1% in 2022. BofA maintained a "Buy" rating on AMD, citing PC and server share gains as well as accelerator ramps.
Meanwhile, the firm maintained an "Underperform" rating on Intel, pointing to CPU share losses and limited growth in accelerators.
In other recent news, Arm Holdings (NASDAQ:ARM), the semiconductor and software design company, reported impressive second quarter financial results for the fiscal year 2025. The company's total revenue reached $844 million, surpassing expectations, driven largely by a 23% year-over-year increase in royalty revenue. This surge was attributed to a 40% rise in smartphone royalties, following the adoption of its Armv9 technology.
Despite a 15% decline in licensing revenue, Arm Holdings outperformed expectations with an annualized contract value increase of 13%. The company also announced significant partnerships with Apple (NASDAQ:AAPL) and MediaTek, underscoring the demand for Arm's Compute platform. Projections for Q3 revenue are set between $920 million and $970 million, with full-year revenue anticipated to be between $3.8 billion and $4.1 billion.
The company's outlook remains positive, with Arm Holdings predicting a 40-45% increase in licensing revenue for the fiscal year, along with a continued 23% year-over-year growth in royalty across various sectors. They also expect the cloud compute market growth to accelerate in the latter half of the year.
These recent developments highlight Arm Holdings' strategic focus on expanding its technology's reach across various sectors, including AI and compute resources.
InvestingPro Insights
To complement the analysis of CPU market trends and the performance of AMD and Intel, let's take a closer look at Arm Holdings (ARM), a key player in the semiconductor industry that's gaining traction in the server CPU market.
According to InvestingPro data, Arm's market capitalization stands at an impressive $155.0 billion, reflecting its significant presence in the chip design space. The company's revenue growth of 24.56% over the last twelve months as of Q2 2025 aligns with the increasing adoption of Arm-based processors in various segments, including servers, as mentioned in the article.
InvestingPro Tips highlight that Arm operates with a moderate level of debt and has liquid assets exceeding short-term obligations, suggesting a solid financial position to support its growth initiatives. This financial stability could be crucial as Arm continues to expand its presence in the server CPU market, where the article notes its unit share has risen to 7.0% in the third quarter.
The company's strong performance is further evidenced by its remarkable 182.15% price total return over the past year. This substantial growth may reflect investor confidence in Arm's potential to capitalize on the shifting dynamics in the CPU market, particularly as traditional x86 players like Intel face challenges.
For readers interested in a deeper analysis of Arm's position in the evolving semiconductor landscape, InvestingPro offers 16 additional tips, providing a comprehensive view of the company's prospects in this competitive industry.
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