Read the Tape

It is not the first time for CPU makers. AMD’s share price surged by 15% post-market to a new high after announcing strong 1Q 2026 results, underpinned by the scarcity in the high-performance CPU and accelerator stack. It reaffirms our positive view on the CPU segment, and its potential is still underestimated by the market. The results call commentary from AMD management was decidedly upbeat, delivering a message that has been consistent across Intel and other industry peers where the market is racing to meet the next stage of AI usage, creating a solid pricing power for the supply side.

The AMD Pivot: Momentum is Accelerating

AMD delivered a strong Q1 2026 print that exceeded street forecasts.

• Upping the forecasts: AMD recorded 38% y-o-y revenue growth and 95% earnings growth y-o-y in Q1 2026. They are forecasting a staggering 46% y-o-y top-line growth for next quarter.
• Margin expansion: Gross margins are projected to expand from 53% in Q1 to 56% in the next quarter, suggesting significant operating leverage and immense pricing power in a supply-constrained world.
• Market Reaction: The stock surged 15% post-market, echoing the +20% post-market move we saw recently with Intel (INTC) after announcing 1Q 2026 results.

The CPU Scarcity Thesis: Inference & Agents

We are witnessing the Industrialization of AI. The “foundry reality” we first noted with Intel is now a sector-wide phenomenon.

• The “New Scarcity”: Inference and agentic AI (automated agent workflows) are driving an insatiable demand for high-performance CPUs and accelerators.
• The Handful: This segment is now a scarce resource controlled by a tiny group of players. If you don’t own the silicon, you cannot control your own fate in the AI era.
• CPU-to-GPU ratio suggests longer-term driver: In the results call, Dr Lisa Su, Chair and CEO said the traditional data center architecture is shifting away from configurations where one CPU serves four or eight GPUs toward a 1-to-1 ratio, driven by the rise of agentic AI and inference workloads. It echos the message from Intel for CPU-to-GPU ratios. Lisa added as autonomous agents proliferate, the industry anticipates that these ratios will continue to tighten, potentially leading to deployments where CPUs even outnumber GPUs.

The Broad Tape: Intel, AMD, and ARM

The positive narratives were foretold by Intel’s strong results and the multi-week breakout across the three major CPU companies.

• One more to go: All eyes turn to ARM, which is scheduled to report results today, May 6, 2026, after the U.S. market close. Expectations are already building for another beat-and-raise cycle.

• The Big Picture: We are witnessing a massive repricing of the compute and memory space. Despite the strong runs since last year, the story remains consistent: demand has exploded as the market shifts toward inference and AI agents.

Micron (MU) CEO recently expressed that AI is still in its “early innings” and that meaningful supply will take time to catch up to this demand. This is equally true for the AI infrastructure re-rating.

The information provided in this note is for educational and informational purposes only and does not constitute financial, investment, or professional advice.