Artificial intelligence infrastructure investment is broadening from GPU chips into CPU processors, creating fresh growth opportunities for Intel (NASDAQ: INTC) and Advanced Micro Devices (NASDAQ: AMD).
Since the start of 2026, Intel and AMD shares have climbed 144% and 147% respectively, yet the two companies differ markedly in business growth, profitability and valuation.
Intel is relying on a recovery in server CPU demand to drive its turnaround, but its foundry segment continues to lose money. AMD, by contrast, is expanding its data center share through EPYC server processors and Instinct AI chips, with second-quarter data center revenue up more than 100% year over year.
Barchart columnist Sushree Mohanty believes that, compared with Intel, which is still in a restructuring phase, AMD currently offers a clearer earnings growth advantage.
Rising AI inference demand puts CPUs back at the center of data center investment
The current AI investment boom was initially driven mainly by GPU demand, with Nvidia dominating the market through its AI chips.
However, as AI applications expand from model training to inference, enterprise deployment and autonomous AI agents, the role of CPUs in data center infrastructure is drawing growing attention.
GPUs mainly handle large-scale parallel computing tasks, while CPUs manage general-purpose computing, system scheduling and a variety of enterprise workloads.
As AI systems scale up, cloud computing companies and data center operators need to deploy both types of processors at the same time.
This shift has created a recovery opportunity for Intel's traditional server CPU business and has also allowed AMD to further expand the share of its EPYC processors in the server market.
Intel data center revenue rises 59%, but foundry business still loses $2.1 billion
Intel is pushing ahead with its business transformation under Chief Executive Lip-Bu Tan, focusing on restoring its competitiveness in the server CPU market.
In the second quarter of 2026, Intel's Data Center and AI (DCAI) business generated revenue of $6.3 billion, up 59% year over year and 24% quarter over quarter, with segment operating profit reaching $2.5 billion.
That performance indicates the server CPU business is once again becoming an important growth driver for Intel.
Unlike AMD, however, Intel still has to bear the construction and operating costs of its own chip manufacturing facilities.
In this year's second quarter, Intel's foundry business lost $2.1 billion, reflecting the fact that while restoring processor competitiveness, the company also needs to resolve the profitability problems of its manufacturing operations.
Analysts expect Intel to earn $1.04 per share in 2026 and $1.44 in 2027, a year-over-year increase of about 38%.
Based on 2027 expected earnings, Intel's current forward price-to-earnings ratio is about 62.3 times.
This means investors have already paid a relatively high valuation for its future earnings recovery, even though the company's foundry business has yet to become profitable.
AMD data center revenue doubles, setting server CPU revenue records for five straight quarters
By contrast, AMD has already converted growing data center demand into stronger revenue and profit performance.
In the second quarter of 2026, AMD's total revenue reached $11.5 billion, up 50% year over year.
Within that, data center segment revenue reached $6.7 billion, up more than 100% year over year, accounting for about 58% of the company's total revenue.
The segment covers EPYC server CPUs and Instinct AI chips, so its growth benefits simultaneously from traditional server computing demand and expanding AI infrastructure investment.
AMD has set server CPU revenue records for five consecutive quarters, with sales to both cloud computing customers and enterprise customers rising more than 70% year over year.
The company also said its revenue share in the x86 server processor market rose further.
On profitability, AMD's second-quarter adjusted earnings per share reached $1.66, up 82% year over year; adjusted gross margin reached 56%, and free cash flow was $1.6 billion.
Analysts expect AMD's earnings per share to reach $6.49 in 2026, up 98% year over year.
Based on 2027 earnings forecasts, AMD's forward price-to-earnings ratio is about 37 times, while its 2027 earnings per share are expected to grow 117% year over year.
Comparison of key financial metrics: AMD grows faster yet trades at a lower valuation
Metric Intel AMD Share price gain since the start of 2026 +144% +147% Second-quarter data center business revenue $6.3 billion $6.7 billion Data center business year-over-year growth +59% More than +100% Data center segment profitability $2.5 billion operating profit Company-wide adjusted gross margin 56% Manufacturing business Own fabs, foundry business lost $2.1 billion Mainly uses external foundry model 2026 expected earnings per share $1.04 $6.49 2027 expected earnings per share growth +38% +117% 2027 forward price-to-earnings ratio 62.3 times 37 times Note: The product composition of the two companies' data center businesses differs. AMD's data center segment also includes AI chips, so its revenue growth rate cannot be viewed entirely as CPU business growth.
In valuation terms, Intel's 2027 forward price-to-earnings ratio is clearly higher than AMD's, yet its expected earnings growth is actually lower.
This difference reflects the two companies' distinct investment logic.
Intel's valuation is still supported mainly by expectations of a business recovery, with investors betting on a restoration of its CPU competitiveness and a narrowing of future foundry losses.
AMD, meanwhile, has already demonstrated clearer growth through gains in server CPU market share, expansion of its AI chip business and improved profits.
AMD plans $8.2 billion acquisition of World Labs to deepen next-generation AI computing push
Beyond its existing server CPU and AI chip businesses, AMD also plans to expand its position in next-generation artificial intelligence through mergers and acquisitions.
The company has agreed to acquire World Labs for $8.2 billion, moving further into emerging fields such as spatial intelligence, robotics and physical artificial intelligence.
These technologies could generate new computing demand in the future, creating market opportunities for AMD processors and system-level products.
Whether the acquisition can translate into substantial revenue growth, however, still depends on the commercialization progress of the relevant technologies.
By comparison, Intel's main task at this stage remains expanding processor capacity, maintaining product competitiveness and improving the profitability of its wafer manufacturing business.
Wall Street is more optimistic on AMD, while both companies' target prices imply upside
Judging by analyst ratings, Wall Street is currently clearly more positive on AMD.
Among the 46 analysts covering Intel, 11 rate it "Strong Buy," 1 rates it "Moderate Buy," 32 recommend "Hold," and another 2 rate it "Strong Sell."
Intel's average target price is $115.58, implying about 29% potential upside; the highest target price is $200.
Among the 47 analysts covering AMD, 37 rate it "Strong Buy," 2 rate it "Moderate Buy," and the remaining 8 recommend "Hold," with no analyst giving a sell rating.
AMD's average target price is $653.74, implying about 24% potential upside; the highest target price reaches $1,250.
The article's author believes Intel's CPU business recovery does offer an investment opportunity, but its manufacturing losses, relatively high valuation and operational execution risks still pose challenges.
By contrast, AMD is not only expanding its server CPU market share, but its fast-growing data center business has also already been converted into profit and cash flow.
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