Morgan Stanley: AI agents drive growth in the server CPU market, with capital shifting away from individual tech stocks.

Huo Xing Finance reports that, on July 23, Bank of America Research stated in its latest report that, with NVIDIA launching its Vera CPU architecture and engaging in more direct competition with AMD on the next-generation AI server platform, the potential market size for server CPUs could reach $170 billion by 2030—approximately four times the current level. Bank of America maintains a Buy rating on NVIDIA and a $350 price target, noting that the core of this competition has shifted from single-chip performance to how AI agent workloads should be measured: whether it’s about completing individual agent tasks faster or hosting more agents within the same rack. This assessment was released as AI stocks entered a period of rapid rotation. The Philadelphia Semiconductor Index had previously declined more than 20% from its peak, entering technical bear market territory, but chip stocks subsequently rebounded. On Tuesday, U.S. equities rose, led by Micron and NVIDIA, with the Nasdaq up 1.3%; by Wednesday, rising oil prices and higher U.S. Treasury yields weighed on risk appetite, causing the S&P 500 to dip 0.1% and the Nasdaq to fall 0.6%, as AI stock volatility continued to drag on broader markets. Fund flows also reflected similar divergence. Bank of America’s client flow report showed clients have net bought U.S. equities for three consecutive weeks, but buying was primarily driven by retail investors and ETFs. Last week, clients purchased $3.4 billion in equity ETFs while selling $3.1 billion in individual stocks; retail investors posted their largest weekly inflow since May 2025, and institutional buying remained positive for a third straight week—entirely fueled by ETFs. Hedge funds, however, sold equities for a second consecutive week. At the sector level, technology stocks saw their first outflow in three weeks, while communications services posted their third consecutive week of outflows. Capital shifted toward consumer discretionary, financials, and energy. Small-cap and micro-cap stocks received strong buying interest, with their four-week rolling average inflow reaching a record high since Bank of America began tracking. Bank of America’s long-term outlook for the server CPU market continues to support the demand narrative for NVIDIA, AMD, and the broader AI infrastructure chain. However, client flow data reminds investors that trading has now shifted from “buying all AI winners” to “selecting companies that can demonstrate orders, margins, and cash flow.”