The next big wave of artificial intelligence (AI) is upon us with agent AI. This is where AI goes from simply generating a response (be it text, a photo, or a video) to independently performing assigned tasks based on instructions and, hopefully, appropriate guardrails.
With agent AI comes the promise of agent commerce, where AI agents can place items in your cart based on your requests, allowing you to simply click a button to pay. It also offers the possibility of a virtual workforce that works side by side with human employees.
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It is no surprise that many companies are opting to use AI agents, and there are certainly numerous software as a service (SaaS) companies that are going down this path. However, perhaps the best way to play with agent AI is on the hardware side. And when it comes to AI agent hardware, one of the best-positioned companies is Advanced Microdevices (NASDAQ:AMD).
A winning AI agent
While it is best known as the distant No. 2 player in the graphics processing unit (GPU) market, behind NVIDIAAMD is actually the market leader in central processing units (CPUs) for data centers. This is a great position, because with the rise of AI agents, there will be a great need for high-performance CPUs.
GPUs are great at providing the power needed to train AI models and help run inference. What they are not good at is working with other tools and sequential reasoning. That’s where the CPUs come in, acting more like the brains of the operation. With agent AI, data center servers will require many more CPUs to orchestrate the increasing use of AI agents.
Both AMD and rival Intel have discussed the GPU to CPU ratio in data centers changing from 8 to 1 to 1 to 1 with agent AI. This is causing a huge increase in demand, and demand for CPUs is now beginning to exceed supply. At the same time, agent AI works best with high-core CPUs, as the cores act as individual workplaces where tasks can be performed. Normally, the more cores a CPU has, the higher its price, so in addition to more units being sold, prices should also increase. AMD has said it expects the server CPU market to reach $120 billion by 2030, up from a $60 billion forecast it gave in November.
Since the huge demand for high-performance CPUs is just beginning, AMD is one of the clearest ways to follow the agent AI trend.