Intel Comeback or AMD Takeover? Which Chip Stock Will Win the AI CPU War?

For years, chipmaker Intel (NASDAQ: INTC) dominated the computer and server processor market, easily remaining ahead of rival Advanced Micro Devices (NASDAQ: AMD), and seemingly positioned to lead whatever was next for the business.

Then, something unexpected happened. The technology industry realized that graphics cards -- while not as well suited as traditional central processing units (CPUs) for performing the most common types of computing tasks that PCs might face in everyday use -- could be effectively used to handle repetitive processing tasks on large data sets. That made them ideally suited for data-rich artificial intelligence (AI) work. The rest, as they say, is history.

Nvidia's (NASDAQ: NVDA) graphics processing units (GPUs), which already enjoy a commanding lead in that niche, were easily adapted to provide parallel processing muscle for AI applications. While all servers still need CPUs, too, in the data center market, they were, for a time, an afterthought. Most estimates put the company's current share of the artificial intelligence accelerator market at a minimum of 80%.

As is so often the case within the technology sector, though, time has provided an opportunity for struggling Intel and AMD to rethink and revamp their tech. And as it turns out, with the nature of AI workloads evolving, CPUs are on course to become a much larger piece of the chip pie within artificial intelligence data centers.

Intel's recently unveiled Xeon 6+ CPUs are specifically "designed for high-density, scale-out workloads," for instance, and are being pitched as an ideal infrastructure for inference-reliant agentic AI. Advanced Micro Devices is pushing its way into the data center CPU market as well, which it expects to grow (again, led by agentic AI) at an annualized pace of 35% through 2030, when it will be worth $120 billion per year.

And this raises the question: Which of these two companies is likely to win the artificial intelligence CPU war that's starting to heat up?

Probably not the one you think.

Same business, very different companies

Even as it's struggling, Intel remains the world's CPU market leader. Numbers from CPU Benchmark indicate that Intel's share of the global CPU business stands at 60%.

The trends are undeniable, though. A decade ago, Intel's share of the central processing unit market was above 80%. Advanced Micro Devices' share has since grown to 38.5%. What gives?

The underlying dynamic is twofold. First, Intel has been distracted for a long while now. And second, AMD has been smart about what it's chosen to do (and not do), and has executed brilliantly.

Image source: Getty Images.

As for Intel's struggle, it arguably began all the way back in 2015. That's when the company's in-house foundries were essentially unable to manufacture functional 10-nanometer processor chips at scale, forcing it to rely on 14-nanometer chips far longer than it initially anticipated. (In the semiconductor world, these numbers reflect the sizes of individual transistors on a chip, and smaller is better, because it means more computing power can be squeezed into the same chip area, making those chips faster and more efficient.) Intel's production woes surfaced again in 2020, when the company attempted to begin the mass manufacture of 7-nanometer chips. AMD had successfully brought such chips to market two years prior with the help of its foundry partner, Taiwan Semiconductor Manufacturing Company (NYSE: TSM).

And yes, that's right when Advanced Micro Devices began chipping away at Intel's CPU market share.

Then the COVID-19 pandemic took hold, wreaking havoc on supply chains. By 2021, Intel was looking for a new way to regain some momentum, and concluded that the answer was to expand its foundries, and start offering its chipmaking services to other designers.

This third-party foundry initiative hasn't exactly gone swimmingly either, however. The company has since scaled back this project, canceling the construction of some planned chip production facilities, largely due to a lack of demand. As then-new Intel CEO Lip-Bu Tan said in 2025 about the company's foundry plans shortly before making that tough decision, "Over the past several years, the company invested too much, too soon."

The thing is, the fallout -- and fiscal impact -- of these missteps is still lingering.

Advanced Micro Devices, on the other hand, largely sidestepped such challenges by limiting its efforts to what it knows it can do well. Namely, AMD has been content to keep relying on manufacturing partner Taiwan Semiconductor Manufacturing. This loyalty ultimately laid the groundwork for it to benefit from the chip performance improvements initiated by the third-party chipmaker.

In this vein, AMD CEO Lisa Su recently committed $10 billion worth of investment in Taiwan's AI chip industry, which is largely an investment in TSMC.

Advanced Micro Devices' brilliance isn't limited to mere logistical matters, though. It's working hard on the technological development front, too. For instance, each of its MI450 GPUs (yes, AMD makes GPUs, too) that will debut later this year offers up to 432 gigabytes of high-bandwidth memory and 19.6 terabytes per second of memory bandwidth. That's competitive with much of Nvidia's comparably priced processors.

It's not difficult to see how these differences impact the companies' results, either. Intel's top line only improved by 7% in Q1, following last year's revenue stagnation. AMD, on the other hand, reported revenue growth of 34% in 2025, then accelerated its pace to 38% in the first quarter of 2026.

"Better" doesn't inherently mean "buy right now"

Intel isn't doomed. It will certainly find a place within the artificial intelligence CPU segment of the chip market.

There's little question that AMD will do the same, though, and do so at least as well as Intel. Indeed, given what we've already seen, it's likely to do far better than Intel, which is still doing clean-up work for a decade's worth of developmental missteps and bad decisions.

Just bear in mind that while AMD may be the better bet here, that doesn't necessarily make its stock worth buying just now. Both tickers are well up over the past few months due to optimism regarding CPUs' improving relevancy to the fast-growing AI industry. AMD's now trading at a frothy 40 times next year's expected earnings per share. So if you want to take a swing at this stock, it might be wise to hold out for a more attractive entry point.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.