Arm Holdings forecasts quarterly revenue above estimates as AI chip demand accelerates

Arm forecasts quarterly revenue above estimates on AI-driven chip demand

July 29 (Reuters) - Arm Holdings forecast second-quarter revenue above Wall Street estimates on Wednesday, signaling strong demand for its energy-efficient chip designs for AI data centers. Demand for Arm's chip architecture has surged as companies like Alphabet (GOOGL.O), opens new tab and Amazon.com (AMZN.O), opens new tab build custom AI chips, boosting the company's licensing revenue and royalties as more complex chips are shipped to data centers. Revenue from royalties, which Arm collects on each chip shipped using its technology, rose 22% to $715 million in the first quarter, while licensing revenue grew 23% to $574 million. Arm's chip designs are prized for ⁠their power efficiency, a critical advantage for data center operators looking to manage the soaring energy costs and heat generated by running massive AI models. Its AGI CPU, a new AI data center chip unveiled in March, is exceeding initial expectations, with demand now surpassing $2 billion across fiscal years 2027 and 2028, the company said. It has already delivered the product to multiple customers. Cloud firm Oracle (ORCL.N), opens new tab has agreed to buy the new chip, Arm CEO Rene Haas said in an interview with Reuters. Haas did not disclose the contract value. "We have ⁠new customers in North America and China," Haas said, adding that the company can now secure supply for more than $1 billion worth of chips. "I feel better about (supply) than I did 90 days ago," he said. Jefferies analysts see sales of the new chip reaching $18 billion in fiscal ⁠2031, surpassing the chip designer's own projection of $15 billion. Haas said the company is not changing any forecasts on Wednesday. Arm projected second-quarter revenue of $1.38 billion, above analysts' average estimate of $1.34 billion, according to ⁠data compiled by LSEG. The UK chip designer expects second-quarter profit of 47 cents per share, adjusted for stock compensation, among other things, compared with analysts' expectations of 43 cents per ⁠share. The company reported revenue of $1.29 billion and adjusted per-share earnings of 45 cents for the first quarter. Analysts expected revenue of $1.26 billion and adjusted profit of 40 cents a share. Reporting by Juby Babu in Mexico City; Editing by Sahal Muhammed Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Artificial Intelligence Max A. Cherney Thomson Reuters Max A. Cherney is a correspondent for Reuters based in San Francisco, where he reports on the semiconductor industry and artificial intelligence. He joined Reuters in 2023 and has previously worked for Barron's magazine and its sister publication, MarketWatch. Cherney graduated from Trent University with a degree in history.

Arm Holdings Q1 FY2027 earnings beat estimates on AI demand

Looking to the second quarter, Arm's outlook calls for revenue of $1.33 billion to $1.43 billion and adjusted earnings of 43 to 51 cents per share, the company said. The Wall Street Journal reported that analysts had penciled in revenue of $1.34 billion and adjusted earnings of 44 cents per share for the period. The company pointed to broad adoption of its technology across major cloud and chip companies during the quarter. Nvidia $NVDA's Vera CPU, built on Arm architecture, entered full production, while AWS announced a multi-year agreement with Meta $META to deploy tens of millions of Arm-based Graviton5 cores for AI workloads, the company said. Shipments of its Neoverse data center processors have now surpassed 1.5 billion cores.

US Stock Market: Arm Holdings tops Q2 forecasts on AI demand, shares fall on royalty growth concerns

Arm Holdings beat quarterly revenue and earnings estimates and issued a stronger-than-expected revenue forecast, supported by robust demand for AI infrastructure and data centre chips. However, the stock fell nearly 7% in after-hours trading after the company warned of softer smartphone royalty growth, overshadowing optimism around its expanding AI business. Arm Holdings delivered stronger-than-expected quarterly results and issued an upbeat revenue forecast for the current quarter, reflecting sustained demand for artificial intelligence infrastructure. However, the chip designer's shares fell nearly 7% in after-hours trading after the company flagged weaker smartphone royalty trends for the coming quarter, Reuters reported. The British semiconductor intellectual property company projected second-quarter revenue of $1.38 billion, ahead of Wall Street expectations of $1.34 billion, according to LSEG data. It also forecast adjusted earnings of 47 cents per share, exceeding analysts' estimates of 43 cents per share. US MarketsPowered By As on 30 Jul 2026, 01:30 AM IST S&P 500 Top Gainers Garmin294.83(16.23%) GE HealthCare Techs71.90(12.15%) Cognizant Tech Solns55.97(11.25%) SBA Communications186.29(6.49%) Gainers" S&P 500 Top Losers Lennox Intl430.02(-20.97%) Masco72.56(-11.09%) KLA170.19(-10.80%) Micron Technology739.00(-9.94%) Losers" AI drives growth in licensing and royalties Demand for Arm's chip architecture continues to benefit from the rapid expansion of AI computing, particularly in data centres where cloud providers are deploying custom processors. Major technology companies including Alphabet and Amazon are increasingly developing in-house AI chips based on Arm's architecture, supporting growth in both licensing revenue and royalty payments as more advanced chips are shipped. Arm's first-quarter royalty revenue climbed 22% year-on-year to $715 million, while licensing revenue increased 23% to $574 million. The company also posted first-quarter revenue of $1.29 billion and adjusted earnings of 45 cents per share, comfortably beating analysts' expectations of $1.26 billion in revenue and 40 cents per share in adjusted profit. Smartphone weakness weighs on sentiment Despite the strong AI outlook, investors reacted negatively after Arm indicated that smartphone royalty growth would soften in the current quarter. Reuters reported that the company expects smartphone royalty growth of roughly 10% to 15%, with management pointing to memory shortages affecting handset production. The company noted that smartphone royalties are expected to decline sequentially in the next quarter, contributing to the after-hours share decline. Finance Chief Jason Child said the company's overall spending plans and financial outlook remain unchanged despite the temporary weakness in the smartphone segment. Data centre business accelerates Arm is seeing rapid momentum in the data centre market, where AI workloads are driving demand for energy-efficient processors. The company said it has shipped 1.5 billion Arm cores for data centres over the past six years, with approximately 30% of those shipments occurring during the last nine months, highlighting the accelerating pace of AI infrastructure deployment. Growing inference workloads -- where AI models generate responses to user queries -- are creating increased demand for central processing units, complementing graphics processors used for AI training. Arm has also expanded its strategy by developing its own data centre CPU, moving beyond its traditional licensing business. New AI chip gains traction Arm's AGI CPU, introduced earlier this year, is performing better than initially expected. The company said customer demand for the processor now exceeds $2 billion across fiscal 2027 and 2028, and it has already shipped the product to multiple customers. Oracle has agreed to purchase the new chip, Reuters reported, although Arm did not disclose the size of the agreement. The company also said it has secured enough supply capacity to support more than $1 billion worth of chip shipments, reflecting improving manufacturing availability. Analysts remain optimistic While Arm maintained its long-term outlook, Jefferies analysts project sales from the company's new chip could reach $18 billion in fiscal 2031, above Arm's own forecast of $15 billion. Management did not revise its long-term projections during the earnings announcement, but continued strength in AI infrastructure spending suggests the company remains well positioned to benefit from growing demand for power-efficient processors used in cloud computing and next-generation AI applications.

Why is Arm Holdings stock surging today? By Investing.com

Investing.com -- Arm Holdings stock surged 18.0% in afternoon trading today, powered by sustained analyst conviction around the company's accelerating data center royalty revenue and the broader re-rating of AI chip infrastructure plays. The catalyst traces back to the company's fiscal first-quarter 2027 earnings report, released on July 29, 2026, in which Arm posted record quarterly revenue of $1.29 billion -- ahead of Wall Street's consensus of roughly $1.27 billion -- while adjusted earnings per share came in at $0.45, topping the $0.40 estimate. Royalty revenue climbed 22% year-over-year to $715 million, driven by higher royalty rates per chip and deepening adoption of Arm architecture across data centers. Analyst activity has been a key amplifier of today's move. JPMorgan maintained an Overweight rating and raised its price target, specifically calling out data center royalty growth exceeding 100% year-over-year for a second consecutive quarter as hyperscalers continue deploying server CPUs at scale. Needham also reiterated its Buy rating, while flagging some potential near-term headwinds in the smartphone segment. Adding to the bullish backdrop, Arm's new AGI CPU has attracted $2 billion in customer demand, and the company recently participated in a $312 million funding round for AI chip startup Olix, reinforcing its strategic positioning within the AI ecosystem. The broader semiconductor sector provided a powerful tailwind today, with chip peers broadly rallying ahead of AMD's Q2 2026 earnings report due after the close. The Nasdaq composite is up 2.86%, the S&P 500 is up 2.01%, and the Dow Jones is up 1.94%, creating a risk-on environment that disproportionately benefits high-growth, high-beta names like Arm. Notably, the stock had slipped 1.74% on Monday, August 3, making today's move partly a sharp recovery from that pullback. Taken together, a combination of a strong earnings beat still being digested by the market, bullish analyst price target revisions anchored to data center royalty outperformance, and a broadly supportive macro tape has created the conditions for today's outsized rally, pushing Arm to a session high of $282.71 and well above its opening price of $253.97. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Arm Sees Above-Consensus Quarter as AI Chip Demand Accelerates

Arm forecasts Q2 revenue of $1.38bn, above the consensus of $1.34bn, along with adjusted EPS of 47 cents, versus 43 cents expected. The group is benefiting from a surge in investment in artificial intelligence infrastructure, which is boosting demand for its low-power chip architectures. In Q1, royalty revenue rose 22% to $715m, while licensing revenue increased 23% to $574m. Arm's technologies are increasingly being used by companies such as Alphabet and Amazon to design their own AI chips, with energy efficiency a key advantage for data centers facing rising power consumption. The company also said its AGI CPU processor, unveiled in March, is outperforming initial expectations, with demand exceeding $2bn for fiscal years 2027 and 2028. Oracle is among the first customers to adopt the new chip. Chief Executive Rene Haas said the group has added new customers in North America and China and is increasingly confident in its supply capabilities. While some analysts believe AGI CPU sales could exceed Arm's current projections, the company is, for now, maintaining its outlook. In the first quarter, Arm reported revenue of $1.29bn and adjusted EPS of 45 cents, both of which exceed market expectations.

Arm Posts Higher 1Q Revenue, Profit as AI Demand Drives Growth

Arm Holdings posted higher fiscal first-quarter profit and revenue as demand for its chip designs continued to grow across artificial intelligence infrastructure and data centers. The British semiconductor design company reported a profit of $270 million, or 25 cents a share. That compares with a profit of $130 million, or 12 cents a share, a year earlier. Stripping out certain one-time items, adjusted earnings were 45 cents a share. Analysts polled by FactSet were expecting 40 cents a share. Revenue grew 22% to $1.29 billion, beating analyst estimates of $1.26 billion, according to FactSet. Royalty revenue rose 22% to $715 million, helped by more than doubling of data-center royalties, while licensing revenue increased 23% to $574 million. Chief Executive Rene Haas said demand for the company's Arm AGI CPU has exceeded expectations, with customer demand now surpassing $2 billion across fiscal 2027 and 2028, more than double the $1 billion opportunity the company outlined last quarter. Arm said it has secured manufacturing capacity to support initial deployments and is working with partners to expand production further. The company also said the transition of AI infrastructure to Arm continued to gain momentum during the quarter, pointing to expanding adoption by major cloud providers and chipmakers including Nvidia, Amazon Web Services, Google, Microsoft and Qualcomm. Arm said shipments of its Neoverse data-center processors have now surpassed 1.5 billion cores. For the second quarter, the company guided for adjusted earnings in a range of 43 cents to 51 cents a share on revenue between $1.33 billion and $1.43 billion. Analysts currently expect second-quarter earnings of 44 cents a share on revenue of $1.34 billion.