Intel surges 12% as CPU stocks rally. Here's what's driving the move

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Stocks are in rally mode to begin the new trading week, as oil prices tumble. The tech-heavy Nasdaq Composite is up about 2%, led by huge gains in some AI stocks, while the S & P 500 is up 1.3%. The only negative sector in the S & P 500 is energy — and that's hardly a surprise, given the steep drop in oil prices. U.S. benchmark WTI crude is down more than 5%, to roughly $95 a barrel, while international standard Brent crude is off about 4%, to just below $100. President Donald Trump said he's open to discussions with Iranian President Masoud Pezeshkian in New York this week at the UN General Assembly. The New York Times also reported that Trump has opted not to strike Iran-allied Houthi in Yemen, at least for now. That one-two combo has raised hopes of cooling tensions in the Middle East, which could lead to a reopening of the Strait of Hormuz. Intel is our biggest mover on the day, surging more than 13% to about $123 a share. The stock, which rose more than 5% last week, is now trading at levels last seen in early July. As for what's driving Monday's move, a clear trend emerges across the semiconductor group: it's a CPU kind of day. Advanced Micro Devices is up 9%, touching the $1 trillion market cap threshold, and Arm Holdings is flying more than 15%. AMD and Intel are longtime rivals in the market for server central processing units (CPUs), specifically CPUs that use the x86 instruction set to communicate between software and the chip. Arm licenses its Arm instruction set — the main commercial alternative to x86 — to other companies that design chips, such as Amazon's Graviton CPU and Nvidia's Grace and Vera CPUs. Shares of Qualcomm , which is entering the data center market with an Arm-based CPU, are up more than 8%. By contrast, shares of Club names Nvidia and Broadcom — chipmakers not viewed as bets on CPU demand — are up a more muted 2% and 1%, respectively. The rekindled excitement for CPU stocks is likely spilling over from the buzz around Meta's Muse personal agent app, which lets users automate tasks such as booking appointments, responding to emails, and more. After debuting on Sept. 8 , Muse has received rave reviews and has vaulted to the No. 1 free app on Apple's App Store over the past few days. The consumer adoption of agents is shining a light on how agentic systems fuel demand for CPUs, which have been supply-constrained this year. This was a big conversation in the spring and early summer, and Muse has put it front and center again. "Up to this point, a lot of the agentic use cases have not been for normal people. It's been things like agentic coding. ... Now you've got Meta's Muse and other agents out there that are starting to get the potential for more broad-based adoption," Bernstein chip analyst Stacy Rasgon said on CNBC earlier Monday. "If you start to get the normies using agentic AI, using agents, it's being read as having the potential to put the CPU shortage and CPU demand into overdrive." A traditional generative AI chatbot typically relies primarily on AI accelerators, such as Nvidia's graphics processing units (GPUs) and Google's tensor processing units (TPUs), to generate responses. But agentic tasks usually involve many more steps to produce the desired output, which is where CPUs come into play, complementing the accelerators. CPUs are ideal for handling certain parts of the multi-step task, including planning what needs to be done, running code, and accessing tools like external databases. In addition to its CPU exposure, Intel is one of Jim Cramer's favorite ways to invest in the AI boom due to its third-party manufacturing and chip packaging business. The rollout of Muse isn't just benefiting the CPU makers. It has also cast a positive halo on Meta's often-criticized AI ambitions. Shares are up 18% since the Sept. 8 close, including a nearly 9% jump on Monday. In a piece for Club members on Sept. 9, we made the case that Meta shares were cheap and still worth buying, in part, because the market was just starting to give the company credit for its emerging AI prowess. Fast forward about two weeks, and investors have clearly warmed up to Meta. The company has faced criticism for spending too much on AI computing and talent without a clear plan to monetize it. The early success of Muse offers a clear counter to that critique. Muse has two paid tiers ($20 or $100 per month, depending on usage) that complement a free option. While still early, usage stats for the Muse app and the Muse family of models will be in focus at Meta's annual developers conference this week, analysts at Wells Fargo wrote in a note to clients. They raised their price target on the stock to $796 from $640 and reiterated their buy rating. Thanks to the success of Meta's new AI launches, analysts argued the company now has a compelling story to tell. At least one counterbalance to the Muse momentum: Amazon has blocked Muse from accessing its online marketplace, citing a violation of usage terms, according to the tech publication GeekWire . There are no major earnings reports after the closing bell Monday. Before the open on Tuesday, we'll hear from RV maker Thor Industries , auto parts retailer AutoZone , and MillerKnoll , the parent of Herman Miller furniture. On the economic data side, the Richmond Federal Reserve branch's regional manufacturing index is due out at 10 a.m. ET. 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