Arm's AGI CPU secures $2 billion in demand, but faces supply chain hurdles and single-digit share

Arm's $2 billion in AGI CPU sales are still not enough to penetrate 5% of overall market share, analyst reveals -- at least $90 million worth of CPUs to be shipped before FY2027

When Arm introduced its first 'physical' AGI processors back in late March, the company expressed optimism about their adoption by select customers. However, in less than two months, the company attained around $2 billion in commitments for its AGI CPU over the next several years, smashing the company's expectations two-fold. Despite this heightened interest, Arm's market share will be in the low single digits even if it manages to ship $2 billion worth of CPUs in two years, Mercury Research told Tom's Hardware. "Customer response to the Arm AGI CPU is already strong, with more than $2 billion of customer demand across FYE27 and FYE28 - more than double what was stated at Arm Everywhere," a statement by Arm in its earnings press release reads. Arm officially introduced its AGI CPU on March 24, 2026, and referred to it as 'production silicon,' which means that the design of the processor itself is final. However, production of the CPU is expected to begin in the second half of 2026, with initial customer shipments expected in Q4 2026. Arm expects to ship between $90 to $100 million worth of AGI CPUs in Q4 2026 alone. Given the rising interest towards the AGI CPU, the company now expects that by FY 2031 (ending on March 31, 2031), it will generate $15 billion in AGI CPU sales and $10 billion in IP revenue, which will drive its total revenue to $25 billion per year, up from $2.61 billion in FY 2026. Generating $15 billion in data center CPU sales in a single year is a big deal; for example, Intel earned $16.8 billion selling server processors last year. Given the rising demand for CPUs, particularly for agentic AI workloads, Arm's revenue may indeed increase by almost a factor of 10, with actual CPUs accounting for 60% of that total figure. Single-digit percent of the server market While $100 million worth of AGI CPUs in Q4 2026 and over $2 billion of demand for the next two fiscal years looks like a lot of money (especially given the fact that Arm's current annual revenue is $2.61 billion), this means that Arm's presence on the market of server and data center CPUs (silicon CPUs, not IP) will be negligible (yet still quite hard to achieve) if compared to share of merchant CPUs. AMD and Intel sold just under 20 million data center-oriented EPYC and Xeon SP processors worth tens of billions of dollars in 2025, according to Dean McCarron, president and principal analyst at Mercury Research, a leading CPU market research firm. If we only consider 2025 data center CPU shipments, Arm would only need around 4% unit share of the current server CPU market to achieve its $2 billion revenue target. "In round numbers for 2025 AMD's EPYC average selling price (ASP) was about $1,325," said Dean McCarron to Tom's Hardware Premium. "For Intel, the 2025 ASP for Xeon SP* is about $1,125. What Arm gets of course might be different, and prices are rising, but something like $1,250 probably is not a bad starting place." At this point, it is hard to estimate the actual ASP of Arm's AGI since while the company advertises processors with up to 136 cores, we can only wonder how many SKUs there will be and how many cores will entry-level models have. If Arm behaves like a typical CPU maker that tends to balance recovering its development and manufacturing costs and maximizing margins, then AGI's ASP will be comparable to that of EPYC or Xeon. "So, $2 billion would take roughly 1.6 million CPUs, if that is done over the course of a couple years -- eight quarters -- that is an average of 200,000 units per quarter," McCarron explained. "For comparison, in 2025, the combined EPYC and Xeon SP markets averaged just under 5 million units per quarter, and of course, that is going to be growing rapidly in 2026 and beyond. So, Arm's $2 billion in server CPU revenue requires them to sell just 4% of the total units right now, and this would be an even smaller percentage of the total in a couple years." Since Meta is a co-designer partner and lead customer for Arm's AGI CPU, it might get a considerably lower price, which means that Arm will have to supply more units to meet its revenue target, which will mean a higher market share, but at the cost of lower profits. "While those [ASP] figures span entry-level to the largest cores, the volumes (and ASPs) are dominated by the hyperscalers," explained McCarron. "When you buy hundreds of thousands of units at a single time, there are some volume discounts, which is why the ASPs are in the low thousands and not $10,000+." *Other Intel server products were excluded from the comparison as they are not direct competitors to Arm-based data center CPUs. But can Arm supply? Given the widespread shortages of everything from wafers at TSMC to memory and from storage devices to advanced chip packaging capacity, we can only wonder whether Arm can increase its output of its AGI CPUs in the next two years by a factor of two. The company has not given a positive answer straight away, but it claims that it is working on it. "How quickly can we get units?" Rene Haas asked rhetorically. "The number that we talked about end of March was supply in place to support $1 billion of demand, and that includes memory, that includes wafers, that includes packaging, that includes access to test equipment. For the $2 billion, we are now in the process of securing supply to support that. The teams are working around the clock to make sure we can find the right answers for our customers." Strategic positioning Strategically, Arm positions its AGI CPUs not as traditional off-the-shelf processors competing directly with merchant CPU vendors and/or custom silicon designed by (or for) leading hyperscale cloud service providers, but as scalable compute platforms and subsystems that hyperscalers and OEMs can use for specific workloads and vertically integrated AI stacks. The first-gen Arm AGI processor was co-developed with Meta, which will be the first and lead customer for the CPU. Nonetheless, Cerebras, Cloudflare, F5, OpenAI, Positron, Rebellions, SAP, and SK Telecom plan to deploy the Arm AGI CPU for a variety of use cases that include agentic AI CPU workloads. These include accelerator management and control plane processing, as well as other CPU workloads that support AI agent infrastructure or typical cloud workloads. While the AGI processors will not be available on demand like server CPUs from AMD and Intel, interested parties will be able to get AGI-based rack-scale solutions from such OEMs and ODMs as ASRock Rack, Lenovo, Quanta Computer (which is the leading supplier to Meta), and Supermicro. On the hardware side, Arm claims that its AGI processor is the world's most efficient agentic CPU. In particular, Arm claims that its AGI CPU was purpose-built as a new class of processor for sustained parallel performance at rack scale, delivering high 'per-task performance' without throttling across thousands of cores and retaining modern data center power and cooling limits. Arm's 1 Generation AGI is a data center-bound processor that features up to 136 high-performance Neoverse V3 cores at up to 3.70 GHz, based on the Armv9.2 instruction set architecture, equipped with dual 128-bit SVE2 (Scalable Vector Extension 2) units per core, as well as 2MB of L2 cache per core. The CPU features a 12-channel DDR5 memory subsystem supporting up to 6 TB of 8800 MT/s memory, providing up to 6 GB/s of bandwidth per core, and has an I/O that supports 96 PCIe Gen6 lanes with CXL 3.0 on top for caching and memory expansion. The CPU is comprised of two identical chiplets (with their own memory interfaces and I/O) made using a 3nm-class process technology and has a thermal design power of 300W. Arm has a roadmap for its own AGI processors that spans years. While the company does not disclose it to the public, its management implies a consistent and significant core count increase, and believes that agentic AI workloads will call for racks full of CPUs rather than racks that pack a few CPUs and tens of AI accelerators. When it comes to agentic AI workloads, they will not call for more CPUs, but rather for more CPU cores; hence, the rapid core count increase seems to be a logical evolution for Arm's own AGI processors. "The way I think they think about it is that while the ratios may not go to more CPUs than GPUs from a chip standpoint, they probably will from a core count standpoint," said Rene Haas, chief executive of Arm, during the recent earnings call. " CPUs today, the Arm AGI CPU, for example, has 136 CPU cores. [Nvidia's] Vera, that is 88. As I mentioned earlier, could I see those core counts doubling or quadrupling over the next number of years? Absolutely. [...] Will you see many more CPUs inside a data hall, dedicated racks of CPUs that are doing agentic orchestration and scheduling and management? 100%." With up to 136 highly high-performance cores optimized for agentic AI and data center workloads and available starting from Q4 2026, Arm's AGI CPU is poised to be in high demand from those who need high-end CPUs to run their AI agent infrastructure and whose software stack is already optimized for Arm. Arm braces for AGI influx Orders for Arm's 136-core AGI CPUs have doubled to over $2 billion since their announcement on March 24. The development is a result of the skyrocketing growth of demand for CPUs for agentic AI infrastructure and reflects similar occurrences at AMD and Intel. The company now expects to generate $15 billion in AGI CPU sales and $10 billion in IP revenue in fiscal 2031 (which ends on March 31, 2031), increasing its revenue by 9.5X in five years. However, while $2 billion by FY2028 and $15 billion in FY2031 look like a huge amount of money, Arm will remain a strong contender, rather than a major supplier of data center CPUs, as AMD and Intel earn tens of billions per year selling their EPYC and Xeon parts and are projected to earn hundreds of billions in the 2030s. Mercury Research believes that Arm could ship roughly 1.6 million of AGI CPUs over the next two fiscal years, which looks pale compared to nearly 20 million of EPYC and Xeon processors sold in 2025. Still, it should be noted that Arm does not plan to compete directly with merchant CPUs as its AGI processors will be available to select hyperscale CSPs and through OEMs and ODMs that will offer rack-scale solutions based on AGI CPUs. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

Datacenter to become Arm's biggest business 'soon'

Chip design company Arm says the datacenter will soon be its biggest source of revenue. Arm rose to prominence as a purveyor of chip designs for low-powered devices and then became the de facto standard for smartphone processors. In recent years, the company created more powerful chips, and datacenter players took note: Amazon and Microsoft built their own datacenter silicon on Arm designs. In March, Arm announced a new CPU design called "AGI" aimed at powering agentic AI applications. During its Q4 FY 2025/26 earnings call on Wednesday, CEO Rene Haas said "Customer response to the Arm AGI CPU has been very strong. We now have more than $2 billion of customer demand across fiscal 2027 and fiscal 2028. This is more than double what we stated at launch." The CEO also admitted that Arm is yet to assemble the supply chain to deliver $2 billion worth of AGI silicon - but is working to get that right. Haas theorized one reason for customer interest is that they see AI agents running on dedicated processor cores and Arm's AGI chips have 136 of them. He thinks datacenter operators will therefore run racks full of Arm CPUs alongside racks full of GPUs. "I think one thing we know for sure is that we probably have under-called the CPU demand in terms of the transition here," Haas said. He then said Arm is "on track towards our forecast of $15 billion" annual revenue for AI infrastructure , and added: "Soon, the datacenter will be Arm's largest business. The direction is clear. Customers want Arm at the center of the AI datacenter." CFO Jason Child chimed in with a prediction Arm is also on track to double annual revenue from selling its IP to $10 billion by 2031, with most of that coming from datacenter products. Revenue for the company's most recent quarter landed at $1.49 billion, up 20 percent year-over-year. Full-year revenue of $4.9 billion represented a 22.8 percent increase. The company forecast $1.25 billion revenue for its current quarter, and said cash from AGI chip sales will start to arrive in volume starting FY 27/28. Investors weren't quite sure what to make of this, first sending the company's share price up ten percent above its $237 close, before pushing it down to $222. ®

Arm projects $2bn in sales of its new AI chip from next year

Arm shares jumped 10 per cent on Wednesday after it said strong demand for its new AI chip would drive $2bn in sales in 2027 and 2028, the first indication of the pay-off from a high-stakes shift into selling its own chips. The SoftBank-backed UK chip designer reported revenue of $1.5bn in the quarter to the end of March, roughly in line with Wall Street estimates. It said it expected $1.26bn for the current quarter, slightly above the $1.2bn expected by analysts. Chief executive Rene Haas said demand for Arm's first data centre chip had "exceeded expectations, reinforcing Arm as the compute platform for the AI era". The $2bn forecast doubles what the company had guided for the same period at the launch of its chip about a month ago. The stock jumped in after-hours trading. The company reported $671mn in revenue from the royalties it receives on products using its intellectual property, slightly below the $700mn expected by analysts, according to Visible Alpha. But its licensing revenue was $819mn, above the $775mn analysts expected, which Arm attributed to demand for its AI chip designs. Arm and other chip companies, such as Intel and AMD, have all benefited from surging demand for central processing units. These chips were less in demand during the earlier stage of the AI boom, and clients rushed to buy Nvidia's graphics processing units to train AI models. CPUs are now increasingly sought after to help run AI applications. Arm said on Wednesday that CPU demand was set to quadruple. Arm's results followed AMD reporting strong results on Tuesday. AMD's shares rose around 18 per cent on Wednesday after chief executive Lisa Su doubled her prediction for AI CPU market growth into 2030. Arm shares have more than doubled in value since the start of the year, helped by the company's long-awaited announcement of its own AI processor chip in March. Arm's move from offering intellectual property for other chip designers to offering its own complete AI chip marked a big shift, raising the potential for the company to grab a much larger share of the global market in data centre infrastructure. Haas predicted in March that the new chip would drive a fivefold increase in revenue over the next five years. But the launch of the "AGI CPU" will also pit Arm against its own customers such as Nvidia, Google and Amazon. It comes as SoftBank chief executive Masayoshi Son pushes ahead with "Project Izanagi", an effort to create a challenger to Nvidia. Last month, Haas was appointed chief executive of SoftBank's international group, as the FT previously reported.

Arm forecasts higher-than-expected revenue on surging AI data center demand

May 6 (Reuters) - Arm Holdings (O9Ty.F), opens new tab, forecast first-quarter revenue above Wall Street expectations on Wednesday, benefiting from higher adoption of its chip technology as tech companies spend heavily on artificial intelligence compute. Arm shares jumped 12% in after-hours trading. The company expects quarterly revenue of $1.26 billion, compared with analysts' estimates of $1.25 billion, according to data compiled by LSEG. Arm generates revenue by licensing its technology to companies such as Nvidia (NVDA.O), opens new tab and Apple (AAPL.O), opens new tab, collecting royalty payments for every product built using its designs. These chip architectures are highly valued for consuming relatively little power -- a key advantage for data center operators who are under increasing pressure to control the rising energy demand and heat output that come with ⁠running large-scale AI models. ARM DESIGNS DOMINATE SMARTPHONES Arm's designs power virtually every smartphone in the world, giving it an important role in the vast handheld market. However, a shortage of memory chips has strained the industry, hiking the prices of consumer electronics and stalling sales, leaving Arm with potentially lower royalties. Smartphone chip designer Qualcomm (QCOM.O), opens new tab last week provided a dour quarterly revenue forecast due to the memory issues, but its stock jumped on upbeat comments of a demand rebound. Arm shares have soared this year, climbing more than 91%, and outperforming other major chip makers including Nvidia, Advanced Micro Devices (AMD.O), opens new tab and Broadcom (AVGO.O), opens new tab, as of Tuesday's close. Arm's fourth-quarter revenue came in at $1.49 billion, beating estimates of $1.47 billion. Royalty revenue was $671 million, compared with expectations of $697.1 million. Licensing and other revenue was $819 million, while analysts had expected $774 million. Arm forecast first-quarter adjusted earnings per share of 40 cents, compared with ⁠Wall Street estimates of 36 cents. Arm, like its peers, has tapped into the growing market for central processing units, as the rise of artificial intelligence agents introduces the need for substantial general-purpose compute. "We are very bullish about this data center demand," Arm CEO Rene Haas said in an interview, adding the current quarter includes a "pretty healthy uptick in terms of royalties associated with the data center." AMD forecast quarterly revenue above estimates on Tuesday, and said it ⁠expects the server CPU addressable market to grow at greater than 35% annually, reaching over $120 billion by 2030. That compares with the 18% growth rate it forecast in November. Earlier this year, Arm announced the AGI CPU, a data center chip that will address data-crunching needed for a specific type of AI that is able ⁠to act on behalf of users with minimal oversight, instead of responding to queries as part of a chatbot. Arm has said the chip will add billions of dollars of revenue. The company said on Wednesday it has secured $2 billion worth of customer demand for the processor across ⁠fiscal 2027 and 2028. Arm has enough capacity secured to fulfill $1 billion of demand the company discussed when it launched the AGI CPU, but has not yet secured it for the second billion dollars' worth of orders, Haas said. "We're working really hard with the supply chain to fulfill that demand," the CEO said. Reporting by Zaheer Kachwala in Bengaluru; Editing by Sriraj Kalluvila and Bill Berkrot Our Standards: The Thomson Reuters Trust Principles., opens new tab

Arm CEO looks to set the record straight after the stock's post-earnings tumble

Arm Holdings CEO Rene Haas on Thursday sought to reassure investors about one of the biggest sticking points after its earnings report: Will Arm be able to produce enough of its AI chips to meet demand? In an interview with Jim Cramer on CNBC, Haas said he was "confident" that Arm would secure a sufficient supply of its new central processing units (CPUs) to meet its stated $2 billion in customer demand across fiscal 2027 and fiscal 2028. Arm's fiscal 2027 started last month. "This is not perishable demand, to be clear," Haas said. "This is demand that is firm, sustaining, and very, very robust. Agentic AI puts a huge amount of pressure on the CPU to do all the work around orchestration, scheduling, and the management of these agents. That's only work the CPU can do. So, while we are in the process of securing supply for that additional demand, the demand is not going away. I'm confident we'll get that supply, and I'm also very confident that demand is going to continue." The reason why this matters: That $2 billion figure is double what Arm laid out in March when it announced the chip, branded as the AGI CPU. Investors were excited to see that upward revision in Arm's shareholder letter released after Wednesday night's close, and it helped explain why the stock got an after-hours pop. Doubts arose, though, when CFO Jason Child said on the earnings call about an hour later that Arm was maintaining its official outlook of $1 billion in AGI CPU revenue over the next two fiscal years "while we pursue supply chain capacity." He added, "We still expect the first revenues from production chip sales to land in the fourth quarter of this fiscal year." Shares started to lose steam on the supply chain comment. Now layer in that the stock was red hot coming into the print, and it's unsurprising to see shares down 10% on Thursday. Arm shares ended Wednesday up about 75% since debuting the AGI CPU on March 24. Under these conditions, talking about line-of-sight into more revenue but not actually upping the forecast is going to invite profit-taking. On Wednesday, Jim warned that the stock was vulnerable to a pullback at any hint of imperfection. ARM 1Y mountain Arm's stock performance over the past 12 months. It turned out the imperfection was around the supply chain, an incredibly complex network of designers, suppliers, and manufacturers all scrambling to meet soaring demand for computing power, as companies spend hundreds of billions of dollars to build new data centers stocked with server racks. Among the biggest bottlenecks right now is securing enough capacity at Taiwan Semiconductor Manufacturing Co. , the world's most advanced third-party chipmaker, to have your product made and packaged. Even though TSMC is ramping up its capacity, volume production cannot happen overnight due to the sheer complexity of the task. Nvidia , Advanced Micro Devices , and Broadcom (co-designer of Google's popular in-house AI chip) are all major customers of TSMC. Amazon's custom Trainium chips are made at TSMC , too. They've worked to secure their place in line. Even Apple , long believed to be TSMC's biggest customer , said last week it's facing supply constraints on its compute systems called systems-on-a-chip (SoCs). In other words, Arm isn't alone in racing to secure supply. But the crowded field amplifies concerns about whether they will secure enough. "These chips take a while to design," Haas said. "They take a while to build. They take a while to get through the entire pipeline," Haas said. "So we are working with our partners in TSMC for months, if not years, to make them aware of the product, the supply, what we think the demands look like, what we think the forecast look like. We're talking to them all the time. So, it's not a surprise. It's not like we whipped up to TSMC and said, 'Hey, look, we've got this chip we announced on March 24. Can you help us?' All of that is lined up." Arm's business model has historically been centered on licensing its intellectual property -- its Arm "instruction set" that enables hardware and software to communicate, and blueprints for other parts of chips -- to external customers. The AGI CPU represents its first foray into making the entire chip itself. Wall Street analysts would frequently ask Arm about reports that it was planning to make a complete chip, Haas noted, but the company was reluctant to provide details. "We really only wanted to talk about it when the product was back from TSMC. It was working, the customer validated it, and we were ready for production," Haas said, and now those milestones have been hit. "All that work, that was all happening in the background. It has to." Bottom line We're happy that Haas took these questions head-on and expressed confidence in the company's ability to navigate a tight supply chain. Execution risk is no doubt a real concern whenever a company embarks on a new product, and it will be something to monitor regularly. At the same time, demand for computing power is off the charts, especially for CPUs, because of the advent of agentic AI systems capable of executing tasks without human intervention. These systems don't just answer a question with text or an image. They can go out and complete tasks such as booking flights and managing inventory. In the first couple of years of the AI boom, demand was strongest for graphics processing units (GPUs) from companies like Nvidia, which helped train massive models. CPUs were an afterthought. Now, CPUs are increasingly essential to the day-to-day use of the models, known as inference. That trend isn't slowing down. Nvidia's CPUs are built on the Arm instruction set. The same goes for Google and Amazon's CPUs. Arm-based CPUs are known for their power efficiency, so these companies pair them with their power-hungry AI workhorse chips, such as GPUs. This gives us confidence that Arm's business collecting royalties will continue to thrive as its in-house chip efforts scale. In more ways than one, Arm is in the sweet spot to reap the rewards of the AI boom. (Jim Cramer's Charitable Trust is long ARM, NVDA, AAPL, AMZN, and AVGO. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Arm's quarter shows how it's carving a lucrative path in the crowded CPU resurgence

Arm Holdings shares fell Wednesday evening despite the chip designer reporting a better-than-expected quarter and giving an upbeat outlook for its data center CPU business. Revenue for the company's fiscal 2026 fourth quarter ended March 31 increased 20% year-over-year to $1.49 billion, ahead of the LSEG-compiled analysts' consensus estimate of $1.47 billion. Non-GAAP earnings per share (EPS) increased 9% to 60 cents, beating the 58 cents expected. ARM YTD mountain Arm Holdings YTD Shares of Arm dipped roughly 6% in after-hours trading, giving back about half the gains they had during the regular session. We pointed out in Wednesday's Morning Meeting for Club members that this could happen -- great numbers and a possible pullback in the stock because of the run-up ahead of the print. It's exactly what happened. The stock closed at a record high of $237 -- padding out year-to-date gains to 117%. Bottom line When we started a position in Arm last month at around $170 per share, we wanted to ensure the portfolio had exposure to the data center CPU market. See, the artificial intelligence revolution has evolved in a major way over the past six months. At first, everything was about having the best graphics processing units (GPUs) to train large language models. Then the focus shifted to inference, and now those workloads are evolving again, from handling human-generated prompts to supporting continuous, agent-driven tasks. While GPUs still have a critical role to play in the future of AI, the once left for dead central processing units (CPUs) are having a major moment. This CPU renaissance was confirmed when Intel reported two weeks ago. Intel CEO Lip Bu Tan said on the April 23 earnings call that the CPU-to-GPU ratio in AI racks used to be 1-to-8. But with the rise of agentics, it's more like 1-to-4 -- and in the future, it could be parity, meaning 1-to-1. In other words, a lot more CPUs are needed than a few years ago. Advanced Micro Devices told a similar story on its earnings call Tuesday night. Quantifying how big the CPU market is getting, AMD CEO Lisa Su said she now expects the CPU server total addressable market to grow at a greater than 35% clip annually, reaching over $120 billion by 2030. In an interview with Jim on CNBC on Wednesday, Su said , "Agents are really driving tremendous demand in the overall AI adoption cycle." It's hard for a stock to go up three times on the same information, so we're not surprised to see Arm give back some of its recent parabolic gains. However, we thought the post-earnings call solidified our thesis. Arm-based CPUs represent more than 50% share among top hyperscalers. AMD and Intel may claim they have the market share edge, but Arm pointed out on the call that the three largest AI accelerator providers pair their chips with Arm-based ones. Nvidia 's Rubin GPUs are integrated with Vera (Arm-based) CPUs; Google has its Tensor Processing Units (TPUs) with its Axion (Arm-based) CPUs, and Amazon has Trainium with the Graviton (Arm-based) chips. All three are also portfolio names. "Whether it's Nvidia, whether it's Amazon, whether it's Google, the very largest and most prevalent accelerators by volume are the TPU, it's Trainium, and it's Rubin. ... Those all connect to Arm," CEO Renee Haas explained on the call. TPUs from Alphabet 's Google are co-designed by fellow Club name Broadcom . Why we own it Chip designer Arm is at the center of the CPU revival. The move from AI training to running the models has reignited demand for central processing units. Arm has lucrative licensing and royalty businesses for its chip architecture, which is widely used by major hyperscalers. In March 2026, Arm unveiled the next chapter in its story: the company's first in-house data center CPU, designed specifically for agentic AI workloads. Competitors : Advanced Micro Devices , Intel Most recent buy : April 20, 2026 Initiated : April 20, 2026 The biggest players in AI are increasingly favoring Arm-based CPUs over traditional x86 processors, an architecture dominated by AMD and Intel, because of their performance advantages and greater efficiency. While Arm's business model has traditionally centered on collecting upfront license fees and royalties tied to chip shipments, the new leg to the story is the development of its own chip. The customer response to the ARM AGI CPU looks terrific. When introducing its first-ever in-house data center CPU at its Arm Everywhere event back in March, the company said it had a line of sight to more than $1 billion of demand over the next two years. It hasn't even been two months, and management has already doubled this view. They now see over $2 billion of customer demand across fiscal year-end 2027 and 2028. However, they did soften this upbeat guide slightly by noting they are maintaining the initial $1 billion outlook because they have to line up the supply chain capacity to meet the demand. Concerns over these supply constraints are what caused the stock to give up its initial pop after hours. As we said when we first added Arm to the portfolio, the company has a great sales pitch with its CPU. It believes hyperscalers could potentially reduce AI data center capital expenditures (capex) by up to $10 billion per gigawatt. That's everything, given the market's focus on free cash flow. The longer-term target is still $15 billion in fiscal year-end 2031, and these sales are not expected to cannibalize Arm's existing business, which is an important push back to a bear thesis. "The primary reason we did this," Haas said, in reference to developing its own chip, "was that our customers asked for it. At the end of the day, we are responding to customer demand in a market." The bottom line is that demand for Arm-based data center CPUs is off the charts and supportive of strong double-digit revenue growth for the foreseeable future. The story gets even better with the success of its in-house chips, and now it's up to management to navigate a tight and complex supply chain environment to over-deliver on its goals. We're maintaining our price target of $250 and hold-equivalent 2 rating, given the recent parabolic move in share price. In the short time since we put Arm into the portfolio, the stock has gained nearly 40% as of Wednesday's close. If the after-hours move holds, we'll be giving back some of that advance. But the rally in Arm shares our April 20 initiation and in 2026, for that matter, has been nothing short of incredible. Commentary As for the quarterly results, License and Other revenue grew about 29% year over year to $819 million, beating Street estimates. These revenue streams are from the upfront license fee the company collects from customers who want access to its CPU architecture and designs. Royalty revenue increased 11% year over year to $671 million, but that actually missed what the Street expected. However, the shortfall was probably due to the smartphone market. This piece of the business still grew year over year, but there's weakness in the end market due to the memory shortage. More importantly, the company saw an accelerated ramp of Arm-based server chips by all major hyperscalers, as well as increased deployment of data center networking chips. We were also pleased to see Arm's gross margins and operating margins come in better than expected. Arm's current revenue streams are all from licenses and royalties, creating some extremely attractive gross margins. They were 98.32% on a non-GAAP basis in the quarter. (GAAP stands for generally accepted accounting principles. Non-GAAP, sometimes referred to as adjusted, strips out one-time factors in hopes of delivering an apples-to-apples comparison from quarter to quarter.) Non-GAAP operating margins were better than expected, too, and we should see more operational leverage in the future as cost growth decelerates from a 26% compound annual growth rate (CAGR) in fiscal year 2024 through fiscal year 2026 to a mid-teens CAGR from fiscal year 2026 through fiscal year 2031. Outlook Arm provides guidance on a quarterly basis. For the first quarter of fiscal year 2027, the company expects revenue of $1.26 billion plus or minus $50 million, meaning a range of $1.255 billion to $1.265 billion. That's slightly better than the consensus estimate of $1.25 billion, according to LSEG. (However, that would be lower sequentially as fiscal Q4 was $1.49 billion.) The company expects non-GAAP operating expenses of $760 million, which is a little higher than the FactSet consensus estimate of $742 million. Non-GAAP earnings per share are expected to be 40 cents, plus or minus 4 cents, meaning a range of 36 cents to 44 cents. This is above the consensus estimate of 36 cents, according to LSEG. (Jim Cramer's Charitable Trust is long ARM, NVDA, GOOGL, AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Arm's stock sinks as it reveals strong interest in its CPUs for AI servers - SiliconANGLE

Arm's stock sinks as it reveals strong interest in its CPUs for AI servers Shares of the chipmaker Arm Holdings plc surprisingly lost ground in extended trading today after it reported fourth-quarter financial results that surpassed Wall Street's expectations. It also revealed an encouraging figure relating to its plans to start manufacturing complete central processing units itself. The chip design firm reported earnings before certain costs such as stock compensation of 60 cents per share, edging past the Street's target of 58 cents. Revenue for the period came to $1.49 billion, up 20% from a year earlier and above the consensus estimate of $1.47 billion. Arm said that its licensing segment did especially well, with revenue reaching $819 million at the end of the March quarter, up 29% and topping the $781 million analyst consensus estimate. But while sales from the royalty business rose 11% to $671 million, they fell short of the Street's target of $690 million. For the current quarter, Arm said it's looking for sales of around $1.26 billion at the midpoint of its guidance range, just ahead of the Street's $1.25 billion forecast. It's also looking for earnings of 40 cents per share, versus the 37 cent-per-share analyst consensus. Wall Street reacted negatively to the report, with Arm's stock sliding more than 6% in after-hours trading, eroding some of the gains made earlier in the day. During the regular trading session, its stock had risen 13%. However, Arm is still one of the best performing stocks this year, up more than 114% in the year to date. Arm is best known for designing CPU cores, the parts of a processor that carry out calculations, and various other components, which are sold to other chipmakers to aid in their chip designs. However, the company last year revealed that it's planning to manufacture its own complete CPU for the first time, and in March it revealed more about that upcoming processor. It's called the Arm AGI CPU, and it's said to provide more than twice as much performance per server rack as Intel Corp.'s rival x86 silicon. Additionally, Arm claims, the AGI CPU can help data center operators reduce hardware costs. The company expects the chip to provide savings of up to $10 billion per gigawatt of data center capacity. In a conference call with analysts, Arm Chief Executive Rene Haas (pictured) said the company has already generated more than $2 billion in customer demand for its first CPU, stretching through fiscal 2028. It's set to ensure that Arm's data center business will soon become its largest segment overall. Haas told analysts that he expects the company to have the largest market share by CPU type by the end of the decade. "We think it's a market that we can play into in a very large way," he insisted. The Arm AGI CPU was co-developed with Meta Platforms Inc. and designed specifically for agentic artificial intelligence systems that can perform business tasks autonomously, with minimal human input. "Data centers are expected to require more than four-times the current CPU capacity per gigawatt as agentic AI scales, creating a market opportunity of more than $100 billion by 2030," Haas added. Traditionally, Arm has always been seen as a leader in the smartphone industry, licensing its instruction-set architecture to companies such as Apple Inc. and Qualcomm Inc. that design chips for low-powered devices. It's often said that Arm's chip designs power 99% of the world's smartphones. But in recent years, the company has massively expanded its footprint in data center servers, which used to be dominated by Intel's and Advanced Micro Devices Inc.'s x86 CPUs. Chips such as Nvidia Corp.'s Grace CPUs, Amazon Web Services Inc.'s Graviton CPUs and Google Cloud's Axion CPUs are all based on Arm designs, which focus on energy efficiency. The rise of agentic AI has increased demand for CPUs. While most AI training workloads are run on Nvidia's graphics processing units, they can be overkill for a lot of inference jobs, when fully-trained models are run in production. Tim Arcuri, an analyst with UBS, told MarketWatch that he expects the total addressable market for data center CPUs to reach around $170 billion by 2030. That would "translate to across-the-board upside" for Arm, Intel and AMD, he added. One reason for that is the growing "attach rate" of CPUs to GPUs in AI servers. Traditionally, AI training workloads have required one CPU for eight GPUs, but the ratio for inference is increasingly one CPU for four GPUs. In addition, Arcuri said he's seeing more demand for "standalone CPU-only server racks." Arm, Intel and AMD will all benefit from this growing demand for CPUs for AI workloads, but Arcuri said he believes Arm's instruction set will likely capture the biggest market share. That's because of the way it's optimized to scale core count and throughput while boosting energy efficiency, he explained.

Arm forecasts higher-than-expected revenue on surging AI data center demand - The Economic Times

Arm Holdings anticipates higher first-quarter revenue, boosted by strong demand for its AI chip technology. However, the company has not yet secured enough supplies for a new chip, raising concerns among analysts. Despite this, Arm's designs power most smartphones globally, and its data center business shows significant growth potential. Arm Holdings forecast first-quarter revenue above Wall Street expectations on Wednesday, benefiting from higher adoption of its chip technology as tech companies spend heavily on artificial intelligence compute. Arm shares jumped 12% in after-hours trading, but reversed course to drop 5.49% after executives told analysts on a conference call that they have not yet secured supplies to meet the demand for a new chip and after analysts ⁠probed about ⁠the costs of getting into the business of making its own chips. The company expects quarterly revenue of $1.26 billion, compared with analysts' estimates of $1.25 billion, according to data compiled by LSEG. Arm generates revenue by licensing its technology to companies such as Nvidia and Apple, collecting royalty payments for every product built using its designs. These chip architectures are highly valued for consuming relatively little power - a key advantage for data center operators who are under increasing pressure to control the rising energy demand and heat output that come with running large-scale AI models. Arm designs dominate smartphones Arm's designs power virtually every smartphone in the world, giving it an important role in the vast handheld market. However, a ⁠shortage of memory chips has strained the industry, driving up the prices of consumer electronics and stalling sales, leaving Arm with potentially lower royalties. Smartphone chip designer Qualcomm last week provided a dour quarterly revenue forecast due to the memory issues, ⁠but its stock jumped on upbeat comments of a demand rebound. Arm shares have soared this year, climbing more than 91%, and outperforming other major chip makers including Nvidia, Advanced Micro Devices and Broadcom, as of Tuesday's close. "It was a very tough setup for them - the expectations were just so high," said Seaport Research Partners analyst Jay Goldberg. "They were good numbers, but not good enough." Arm's fourth-quarter revenue came in at $1.49 billion, beating estimates of $1.47 billion. Royalty revenue was $671 million, compared with expectations of $697.1 million. Licensing and other revenue was $819 million, while analysts had expected $774 million. Arm forecast first-quarter adjusted earnings per share of 40 cents, compared with Wall Street estimates of 36 cents. Arm, like its peers, has tapped into the growing market for central processing units, as the rise of artificial intelligence agents introduces the need for substantial general-purpose compute. "We are very bullish about this data center demand," Arm CEO Rene Haas said in an interview, adding the current quarter includes a "pretty healthy uptick in terms of royalties associated with the ⁠data center." Earlier this year, Arm announced the AGI CPU, a data center chip that will address data-crunching needed for a specific type of AI that is able to act on behalf of users with minimal oversight, instead of responding to queries as part of a chatbot. Arm has said the chip will add billions of dollars of revenue. Arm has enough capacity secured to fulfill $1 billion of demand the company discussed when it launched the AGI CPU, but has not yet secured it for the second billion dollars' worth of orders, Haas said. "The market sees that as a party spoiler," said Michael Ashley Schulman, partner at wealth management firm Cerity Partners. They will likely get the supply but the market doubt hinges on whether it will be quick enough and then what happens when more demand arrives."

Why Is Arm Stock Sinking Thursday? - ARM Holdings (NASDAQ:ARM)

Arm said demand for its AI data center CPUs remains strong, but the company has secured enough supply to meet only about half of current demand, limiting near-term growth potential. However, the company executives highlighted accelerating AI-driven demand, expanding partnerships, and growing adoption of Arm-based infrastructure as the company positions itself at the center of the next wave of cloud and agentic AI computing. Sees Agentic AI Driving Massive CPU Demand Arm CEO Rene Haas said the shift from human-based AI queries to continuous agent-driven workloads is expanding the role of CPUs in AI infrastructure. He explained that agentic AI workloads require CPUs to coordinate tasks, manage memory, enforce security, and orchestrate accelerators, creating a data center CPU opportunity exceeding $100 billion by 2030. Haas added that Arm's AGI CPU, launched at the Arm Everywhere event, directly targets this market, delivering more than 2x performance per rack compared to x86 platforms and the potential to cut AI data center capital expenditure by up to $10 billion per gigawatt. Haas said Arm now sees more than $2 billion in customer demand across fiscal 2027 and 2028 for the Arm AGI CPU, more than double the figure disclosed at launch. He added that the company is working to secure additional wafer, packaging, memory, and testing capacity to support growing demand. CFO Jason Child said Arm still expects initial production revenue in the fourth quarter of the fiscal year while maintaining its long-term outlook of $15 billion in AGI CPU revenue and $10 billion in IP revenue by fiscal 2031. Haas also stressed that AI infrastructure increasingly requires higher CPU core counts. He noted that Arm's AGI CPU already includes 136 cores and predicted future designs could scale to 256 or even 512 cores as AI orchestration workloads expand. Expands Partnerships Across Cloud, AI And Infrastructure Haas pointed to strong momentum among hyperscalers and AI companies adopting Arm-based infrastructure. He said Meta Platforms Inc .(NASDAQ:META) serves as Arm's lead partner and co-developer on a multi-generation roadmap supporting AI workloads for billions of users. Arm executives emphasized that major AI platforms increasingly rely on Arm-based CPUs. He added that Google paired its TPU 8t and TPU 8i systems with custom Arm Axion CPUs, while AWS continues scaling Graviton alongside Trainium and Nitro. Microsoft Corp. (NASDAQ:MSFT) is also advancing its Arm-based Cobalt platform for Azure workloads. Child added that Arm-based server chips deployed by hyperscalers continue driving rapid royalty growth, with data center royalty revenue more than doubling year over year. He also noted that Arm maintains nearly 100% market share in data center networking chips such as DPUs and SmartNICs. Bets On Long-Term Platform Expansion And Ecosystem Growth Haas said Arm's strategy now combines traditional IP licensing, compute subsystems, and silicon products into a single compute platform and software ecosystem. He described silicon as a new growth vector that complements, rather than replaces, Arm's existing IP business. According to Haas, more than 50 companies support Arm's expansion into silicon, including ecosystem partners across manufacturing, EDA tools, software, and cloud infrastructure. Child said Arm signed multiple strategic agreements during the quarter, including a long-term AI technology partnership with the Indonesian government and two next-generation CSS licenses covering smartphone and data center networking chips. He added that annualized contract value grew 22% year over year, reflecting sustained licensing momentum. Looking ahead, Arm executives expressed confidence in continued growth driven by demand for AI infrastructure. Haas said Arm-based CPUs are becoming central to cloud performance, energy efficiency, and AI economics, while predicting Arm could become the largest CPU architecture in the data center market by the end of the decade. Child added that the company expects around 20% royalty and licensing growth in fiscal 2027, supported by continued hyperscaler adoption and AI investment. Arm Price Action ARM Price Action: Arm shares were down 8.62% at $216.85 at the time of publication on Thursday, according to Benzinga Pro data. Photo via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Arm Doubles AGI CPU Revenue Forecast to $2 Billion by 2028 as OpenAI, Cerebras, and Hyperscalers Pile Into Agentic AI Orders

Arm's AGI CPU has seen explosive demand amidst the Agentic AI boom, as the company now reports double the revenue by 2028. In March, Arm launched its AGI CPU, which is specifically designed to address the growing Agnetic AI needs. Unlike traditional x86 solutions, the AGI CPU is based on the Arm architecture, which has been gaining momentum in the data center segment. The move was seen as a big deal for Arm, which switched from an IP provider to a silicon provider. Back during the Arm event, the company had estimated around $1 Billion in chip revenue from the AGI CPU, but in its latest earnings results, the company is now expecting over $2 Billion of AGI revenue by FY 2028, double what was stated during the event. The revenue jump comes from increased customer demand and positive response around the AGI CPU. Arm states that major firms such as OpenAI, Cerebras, Positron, and Rebellions will integrate Arm's AGI CPUs alongside additional compute capacity from accelerators. AI cloud providers are also lining up for AGI supply with Vera, a European company, being one of the spotlights. In addition to deployment across various firms, the AGI CPUs are also available in commercial systems, and ready to order from OEMs such as ASRock, Lenovo, Quanta, and Supermicro. Arm also says that given the momentum around its AGI CPUs, and other firms expanding their compute ecosystems with Arm-based chips, Arm's market share of CPU compute has increased to 50% among the top hyperscalers such as Amazon, Google, and NVIDIA. The launch of the Arm AGI CPU marks a new chapter for the company: expanding the Arm compute platform into production silicon. Customers can now consume the Arm compute platform using IP, Compute Subsystems, and silicon, all while maintaining a common architecture and software ecosystem. Arm Total Arm CPU shipments as of 2026 amount to 350 billion chips and over 22 million developers, forming a robust ecosystem of Arm-based solutions that power the Edge and Physical workloads.

Arm Faces Questions Over AI CPU Niche Erosion As Competition From AMD, Intel, Nvidia Heats Up, But CEO Sa

ARM Says AI Demand Is Expanding CPU Market Haas brushed off concerns about market crowding, saying Arm was among the first companies to project a $100 billion AI CPU opportunity during its "Arm Everywhere" event earlier this year. "Now it's sort of nice to see the rest of the market catching up and going higher than the number," Haas said. He added that AI workloads are driving a sharp increase in CPU core counts as AI agents run multiple independent tasks simultaneously. Haas said ARM has already unveiled AGI CPU features 136 cores and suggested future chips could eventually scale to 256 or even 512 cores. "In a very, very high core-count design, what really matters is efficiency per core and that's where we're world-class," he said. ARM Highlights Nvidia, Amazon And Google Partnerships "The very largest and most prevalent accelerators by volume ... all connect to ARM," Haas said, referring to Nvidia's Blackwell and Rubin platforms, Google's TPU systems and Amazon's Trainium chips. "Increasingly, they are going to be 100% ARM," he stated. "I'm actually confident that by the end of the decade, I believe the largest market share by CPU type will be Arm," he said. Arm Beats Q4 Estimates, Guides For 20% Revenue Growth Arm reported fourth-quarter earnings of 60 cents per share, topping Wall Street estimates of 58 cents. Revenue for the quarter came in at $1.49 billion, ahead of analyst expectations of $1.47 billion. For the first quarter, the company forecast revenue of approximately $1.26 billion, plus or minus $50 million, implying roughly 20% year-over-year growth at the midpoint. Price Action: Shares of Arm jumped 13.63% to close at $237.30 on Wednesday and fell 6.40% in after-hours trading to $222.12, according to Benzinga Pro. According to Benzinga Edge Rankings, ARM ranks in the 94th percentile for Momentum, reflecting strong performance across short, medium and long-term time frames. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo by Ascannio via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Arm Holdings Reports Higher 4Q Profit, Strong Demand for New CPUs

Arm Holdings reported a higher profit in its fiscal fourth quarter, and said it is seeing rampant demand for its new computer chips. The British semiconductor design company said it now has more than $2 billion of demand across fiscal 2027 and 2028 for its new Arm AGI CPUs, following an announcement last month that it would move into the chip-making business. Data centers are now set to be Arm's largest business, and the company remains on track toward its $15 billion forecast, it said Wednesday. The chips are specialized to support agentic AI applications. "The direction is clear: customers want Arm at the center of the AI data center," executives wrote in a letter to shareholders. Shares of Arm were up 11% to $264 after the bell. Arm reported a profit of $313 million, or 29 cents a share. That compares with a profit of $210 million, or 20 cents a share, a year earlier. Stripping out certain one-time items, adjusted earnings were 60 cents a share. Analysts polled by FactSet were expecting 58 cents a share. Revenue grew 20% to a record $1.49 billion, beating analyst estimates of $1.47 billion, according to FactSet. The company said in February that it expects revenue growth would slow in the fourth quarter due to typical seasonality, as well as a tougher year-ago comparison due to higher royalty revenue from a chip by MediaTek. Royalty revenue rose 11% to $671 million, driven by growth in smartphones and artificial-intelligence applications. Royalty from AI data centers more than doubled year-over-year. License and other revenue jumped 29% to $819 million, which the company attributed to strong demand for its platform. For the current first quarter, the company guided for adjusted earnings in a range of 36 cents to 44 cents a share on revenue between $1.21 billion and $1.31 billion. Analysts expect first-quarter adjusted earnings of 37 cents a share on $1.25 billion in revenue. Write to Elias Schisgall at [email protected]