NVIDIA Corporation NVDA is no longer focused solely on graphics processing units (GPUs). The company is making a bigger push into the central processing units (CPU) market as it looks to capture a larger share of the rapidly growing artificial intelligence (AI) infrastructure industry. Its latest move is the introduction of the Vera CPU, a processor designed specifically for agentic AI and next-generation AI factories.
NVIDIA’s CPU strategy is built around combining CPUs, GPUs, networking and software into a single integrated platform. This approach differs from traditional x86 vendors that mainly sell CPUs. By integrating Vera with its Blackwell and future Rubin AI systems, NVIDIA aims to improve performance, reduce bottlenecks and increase efficiency for AI workloads.
The opportunity is significant. NVIDIA generated a record $75.25 billion in data center revenues in the first quarter of fiscal 2027, up 92% year over year. Management believes that agentic AI, which requires massive computing power for reasoning and decision-making tasks, could create a new wave of CPU demand. The company has already stated that AI-driven workloads represent an important growth opportunity for its CPU business.
However, challenging established x86 leaders will not be easy. The server CPU market remains dominated by Intel Corporation INTC and Advanced Micro Devices, Inc. AMD, both of which have decades of experience and deep customer relationships. AMD’s EPYC processors continue gaining market share, while Intel remains a major force in enterprise computing.
Still, NVIDIA’s expanding AI ecosystem and platform-first strategy could help it carve out a meaningful position in the CPU market over the long term. The strategy is likely to drive further momentum in data center revenues. The Zacks Consensus Estimate for fiscal 2027 data center revenues is currently pegged at $363.78 billion, indicating a year-over-year increase of approximately 88%.
Intel and AMD Remain NVDA’s Key Rivals in CPU Market
While NVIDIA is expanding its CPU ambitions, Intel and Advanced Micro Devices remain its biggest competitors in the server processor market.
Intel continues to hold a large installed base across enterprise data centers worldwide. The company’s data center and AI segment revenues rose 22% year over year to $5.05 billion in the first quarter of 2026, supported by strong demand for Xeon server CPUs for AI workloads, higher ASIC sales and new long-term customer deals with leading firms like Google.
Intel is also integrating AI capabilities into its CPUs to defend its market position. Its long-standing relationships with enterprises and cloud providers give it an advantage, as customers often prefer proven platforms for mission-critical workloads.
Advanced Micro Devices has emerged as a stronger challenger in recent years. The company’s data center segment revenues increased 57% year over year to $5.78 billion in the first quarter of 2026, driven by robust demand for EPYC server processors.
Advanced Micro Devices has steadily gained market share from Intel by offering competitive performance and energy efficiency. The company is also pairing its CPUs with Instinct AI accelerators to provide a broader AI computing platform.
NVIDIA’s Price Performance, Valuation and Estimates
Shares of NVIDIA have rallied around 41.5% over the past year compared with the Zacks Computer and Technology sector’s gain of 38.7%.
NVIDIA One-Year Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 19.98, below the sector’s average of 24.01.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 and 2028 earnings implies a year-over-year increase of approximately 87% and 34.8%, respectively. Estimates for fiscal 2027 and 2028 have been revised upward over the past 30 days.
Image Source: Zacks Investment Research
NVIDIA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Beyond Nvidia: AI’s Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren’t likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
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This article originally published on Zacks Investment Research (zacks.com).
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