Arm CEO Says Data Center Business Is 'Exploding'

Record revenue and royalties beat expectations

Arm generated $1.24 billion in revenue and nearly $740 million in royalties, representing 27% year-over-year growth despite broader semiconductor headwinds.

Memory shortage impact minimized by business mix

The company avoided significant impact from smartphone memory constraints because lower-end devices affected by shortages carry lower royalty rates, while high-growth data center revenues offset any weakness.

Data center royalties doubled year-over-year

Data center revenue grew over 100% annually and is expected to become Arm's largest business segment sooner than anticipated, potentially within a few years.

Core count expansion drives royalty acceleration

Hyperscaler chips are adopting more ARM cores per processor, jumping from 96 to 192 cores in AWS Graviton and 72 to 88 in NVIDIA Vera, directly increasing royalty payments per chip.

Agentic AI workloads require CPU capabilities

As AI evolves toward agentic workflows that manage complex operations across systems, these tasks require CPU processing that GPUs cannot handle, cementing ARM's role in heterogeneous compute environments.

Massive CapEx validates AI build-out sustainability

Hyperscalers including Alphabet, Meta, and Microsoft are investing billions beyond initial projections—rendering the $500 billion Stargate initiative credible—and confirming AI infrastructure spending is not a bubble but a long-term transformation.

NVIDIA partnership deepens with standalone Vera CPU

NVIDIA's plan to sell Vera CPUs standalone, using six times more ARM cores than previous Grace generations for storage and offload functions, accelerates adoption of homogeneous ARM-based data center architectures.

SoftBank reaffirms long-term commitment

CEO Masayoshi Son has no intention of selling SoftBank's stake in Arm, viewing the company as significantly undervalued relative to its growth trajectory in AI and data center markets.