First of all you should install xdebug (or another php debugging extension) and see which part is eating the most cpu/ram. If its mysql, then you need caching (eg: memcache or redis), or you can also move mysql to another server, if the problem is with I/O then you need faster hdd's. If the problem is related to requests been queued then you need to load balance. Nginx will make static requests (like css/images/js) a lot faster, and with php-fpm it will also make dynamic (php) requests a little faster (not very much). I have never used varnish before...
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