Does my AMD Phenom 2 x4 965 @stock can handle a Gigabyte HD 7850, or It's time for a new cpu?
Totally depends on the game, anything CPU intensive will probably be held back some but most games should be able to make full use of the 7850, especially if you have the 965 clocked.
Run AMD system monitor to see if your card is running all out or not in your games.
GPU Usage Monitor - AMD System Monitor [Tutorial] - YouTube
AMD System Monitor
If you find that your 7850 is not running at it's full potential (dependent on the game, resolution, and gfx settings) then overclock your cpu. If overclocking the 965 doesn't cut it you can either go for an FX-8350 or try and find a Thuban x6. Depending on what motherboard you are running.
I've got one machine with an X4 965 an another with an i7, both overclocked moderately and fit with GTX 680s, and although the AMD machine is definitely slower I wouldn't assume it's because the GPU is too much for the processor as much as it's just simply a slower CPU that gets less performance in CPU intensive games. That being said, the CPU hasn't felt like too much of a hindrance in most games except when it comes to stuff that's extremely CPU heavy, but there's definitely a difference when moving to a high end chip. Obviously a top of the line CPU is optimal, but in my experience the X4 965 has been ok for gaming if you give it a decent OC.
I ran a couple tests for you with Batman: AC at 1080p, High settings, 4X MSAA, No PhysX:
Core i7 3960X, GTX 680 2GB:
Min: 20, Max: 137, Avg: 101
(edit: posted wrong numbers a second ago. Thought those looked off.)
Phenom II X4 965 @ 3.8Ghz, GTX 680 2GB:
Min: 24, Max: 130, Avg: 82
The difference might be less pronounced with a card like the 7850, and will most certainly be less between a 965 and a more middle of the road upgrade like an FX-8350. I'm generally a fan of Intel CPUs, but considering how cheap the 965 is with a decent mainboard and ram I have not been dissappointed with it for my office machine that sees some occassional gaming.
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