Back in April, Morgan Stanley had highlighted how accelerating Agentic AI demand could boost demand for central processing units (CPUs) beyond the graphic chips that have dominated the AI theme so far.
“As AI transitions from generation to autonomous action, the computing bottleneck is shifting towards CPU and memory, driving a step-change in general-purpose compute intensity.”
The firm estimated that agentic AI could add $32.5–60 billion to a data-center CPU market already exceeding $100 billion by 2030.
Piper Sandler now backs this claim, asserting that Agentic AI is driving demand for Intel Corporation (NASDAQ:INTC)’s CPU server products amid limited supply. On September 9, Piper Sandler analyst David O’Connor initiated coverage on Intel with a Neutral rating and a $110 price target.
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Agentic AI Backs Server CPU Demand
According to O’Connor, Agentic AI workloads are creating demand for server CPUs at a time when supply is limited. This dynamic isn’t expected to balance out until around 2029-2030. The supply limit is in turn a favorable backdrop for whoever has capacity, which in this case is Intel Corporation.
The firm estimates that Intel’s Data Center Group could deliver a high-teens revenue CAGR to 2030E, enough to more than offset any softness in PC and memory. Intel’s latest numbers support this thesis, with the company’s Data Center and AI Segment reaching $6.3 billion in revenue during the second quarter of 2026, up 59% year-over-year.
The more important focus, however, lies in the company’s foundry business and the ability to catch-up in 14A manufacturing. Surprisingly, customer evaluations have been on the upside. Firm noted how management is doing a good job rebuilding company culture, products, and customer trust.
If Intel manages to convert this into major external customers, it may be able to close its manufacturing gap with TSM. Intel does have a recent manufacturing milestone to support the technology side of that thesis, with Intel Foundry becoming the first to run high-volume production using ASML’s newest High-NA EUV lithography tools.
Piper Isn’t Paying More for the Possibility
According to Piper, Intel’s current share price already discounts roughly 15% of the foundry gains. That level of share would represent an estimated one full fab module, referred to as Fab-62, and accounts for 45% of the share price.
In simpler words, investors are already pricing in a meaningful manufacturing recovery when buying Intel today. The DCG demand story and 14A momentum are real too, but they are also already reflected in the price.
Despite the Neutral rating, Q2 has reflected institutional interest strengthening for Intel’s story. 138 hedge funds held the stock at the end of the quarter, up from 112 in the prior quarter. As of August 31, 2026, INTC had a short interest representing 2.9% of the public float. This is a reflection of limited bearish skepticism.
Overall, Piper’s note is constructive than its Neutral rating suggests. Agentic AI is strengthening CPU demand, 14A customer evaluations have been positive, and DCG has a credible growth path as well. However, the problem now lies in valuation. The stock not only needs to improve, it also needs to deliver the foundry gains investors are already paying for.
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