Arm Holdings (ARM)

Arm Holdings (ARM) licenses the CPU architecture inside most of the world’s chips and collects a royalty on every one shipped. Hyperscalers are standardizing AI data centers on Arm-based CPUs: fiscal Q4 2026 revenue rose 20% to a record $1.49 billion as data-center royalties more than doubled, and Arm shipped its first own chip, the AGI CPU.

What does Arm do?

Arm sells designs, not chips, or it did until March 2026. Chipmakers license its CPU architecture and core designs, then pay a royalty on every chip shipped, a model that produced a 97.9% GAAP gross margin in fiscal Q4 2026 (Arm 6-K, May 6, 2026). The two revenue lines tell different stories: license and other revenue, lumpy by nature, grew 29% year over year to $819 million, while royalty revenue, the compounding annuity, grew 11% to $671 million as Armv9 and compute-subsystem (CSS) designs carry higher per-chip rates. Annualized contract value rose 22% to $1.66 billion. Arm is headquartered in the UK and trades on Nasdaq as American depositary shares, with SoftBank Group as its controlling shareholder (Arm 6-K, May 6, 2026).

How is AI driving Arm’s business?

Through the CPUs that orchestrate every accelerator. Arm’s architecture now holds about 50% CPU-compute share among top hyperscalers: AWS’s Graviton anchors a custom-silicon business running above a $20 billion annual rate, Google’s new TPU8t and TPU8i replace x86 hosts with Arm-based Axion CPUs, Microsoft’s Cobalt runs across Azure, and NVIDIA’s Grace and next-generation Vera CPUs are Arm designs paired with its GPUs (Arm 6-K, May 6, 2026). That mix shift is why data-center royalties more than doubled year over year. The next leg is Arm’s own silicon: the AGI CPU, unveiled March 24, 2026 with Meta as lead partner, carries more than $2 billion of customer demand across fiscal 2027-28, double the launch level, toward a forecast $15 billion business (CNBC, Mar 25, 2026; Arm 6-K). CEO Rene Haas summed up the year:

“Arm delivered a third consecutive year of more than 20% revenue growth, driven by strong demand for the Arm compute platform. As AI becomes more agentic, demand for Arm AGI CPU, Arm’s first data center chip, has exceeded expectations, reinforcing Arm as the compute platform for the AI era.”

— Rene Haas, CEO, Arm (Arm 6-K, May 6, 2026)

What did Arm report most recently?

In fiscal Q4 2026 (the quarter ended March 31, 2026), Arm posted record revenue of $1.49 billion, up 20% year over year and above the midpoint of its guidance (Arm, May 6, 2026). Non-GAAP EPS was a record $0.60 against $0.55 a year earlier; GAAP net income was $313 million, or $0.29 per diluted share. GAAP operating margin was 29.4% (non-GAAP 49.1%) as R&D investment kept climbing. For the full fiscal year 2026, revenue reached a record $4.92 billion, up 23%, with royalty revenue of $2.61 billion (up 21%) and licensing revenue of $2.31 billion (up 25%), the third consecutive year of more than 20% growth since the 2023 listing (Arm 6-K, May 6, 2026).

What is Arm’s guidance?

For fiscal Q1 2027, Arm guided revenue to $1.26 billion plus or minus $50 million, non-GAAP operating expenses of about $760 million, and non-GAAP diluted EPS of $0.40 plus or minus $0.04 (Arm 6-K, May 6, 2026). The sequential step down from $1.49 billion is the license line, which swings with the timing of large agreements; royalties are the steadier compounding base. The next print is tentatively set for July 29, 2026 on Arm’s investor-relations calendar (Arm IR).

What are the risks for Arm?

• Becoming a chipmaker. The AGI CPU puts an IP company into silicon, with the inventory, supply, and margin risks that come with it, and it now competes more directly with licensees building their own Arm-based server CPUs.
• License lumpiness and valuation. Fiscal Q1 2027 guidance of $1.26 billion sits below the quarter just reported; with the stock priced for the AI data-center ramp, timing wobbles in large license deals can move the share price sharply.
• SoftBank control. SoftBank Group is the controlling shareholder, and Arm’s own filings flag the risk that its interests diverge from other holders of the ordinary shares and ADSs (Arm 6-K, May 6, 2026).
• Royalty-base cyclicality and competition. Royalties still lean on smartphone volumes, and the open RISC-V architecture plus x86 incumbents contest every socket Arm is winning in the data center.

Related securities, concepts & terms

Arm is the CPU-architecture pillar of the US AI semiconductor concept: the instruction set under NVIDIA’s Grace and Vera, the hyperscalers’ custom server chips, and the head nodes beside accelerators from Cerebras and others.

• US AI Semiconductorparent
• NVIDIA (NVDA)sibling
• Alphabet (GOOGL)related
• Cerebras Systems (CBRS)related
• AI acceleratorrelated

Related indices & ETFs

• KODEX US AI Semiconductor TOP3 Plus ETF (0151S0) · Samsung Asset Management
  Korea-listed ETF (January 13, 2026) tracking the Akros US AI semiconductor index; Arm is a constituent of the concept.
• Akros U.S. AI Semiconductor Top 3 Plus Index (AUAIST3P) · Akros Technologies, Inc.
  The Akros index that frames the US AI semiconductor concept and the benchmark the KODEX ETF tracks.

These references describe index-tracking relationships as a matter of fact and are not a recommendation to buy any product. Akros, as the index provider, may receive licensing fees from product sponsors. Review the product's prospectus before investing.

Frequently asked questions about Arm

Sources & references

1. Arm Holdings plc Reports Results for the Fourth Quarter and Fiscal Year Ended 2026 · Arm Holdings plc, 2026-05-06
2. Arm Holdings plc Q4 FYE26 Shareholder Letter (Form 6-K, Exhibit 99.2) · Arm Holdings plc / SEC EDGAR, 2026-05-06
3. Arm jumps 16% as company expects revenue windfall from new chip, a 'significant shift' · CNBC, 2026-03-25
4. Arm Holdings plc · investor events and presentations · Arm Holdings plc, 2026-06-10