Arm Posts a Record $1.44 Billion Quarter and Says Its $2 Billion Target for Its Own AI Server Chip Is Now 'Very Achievable'
Arm said on November 4 that second-quarter revenue rose 27% to $1.44 billion, with licensing up 50% and data center royalties doubling. It said confidence in up to $2 billion of revenue from its own Arm AGI CPU over fiscal 2027 and 2028 has increased, with orders running through 2027. Total royalties of $670 million missed analyst estimates, and shares slipped after hours.
Arm's quarter says more about its new chip business than its old royalty one. The company reported record second-quarter revenue of $1.44 billion, up 27%, on November 4, and said its confidence in reaching up to $2 billion of revenue from the Arm AGI CPU, the server chip it now sells itself, over fiscal 2027 and 2028 has increased. "We think the two (billion) is now very achievable," CEO Rene Haas told Reuters.
The numbers#
- Licensing and other revenue: $773 million, up 50%, against an estimate of $625.1 million, Reuters reported.
- Royalties: $670 million, up 8%, below the $720.8 million analysts expected. Arm said data center royalties doubled year over year.
- Outlook: Arm forecast third-quarter revenue of $1.54 billion, against an estimate of $1.53 billion, according to Reuters. Shares fell about 1% after hours as the call began.
The AGI CPU#
Arm says it has purchase orders for the AGI CPU from multiple customers running through calendar 2027 and that first commercial deliveries are on track for the fourth quarter of fiscal 2027. Haas told Reuters that Arm worked with TSMC and other suppliers to secure enough materials, including scarce memory, to build $2 billion of the chips. Oracle Cloud Infrastructure plans to offer AGI CPU instances in 2027, Arm said.
Arm also says its share of servers at the top hyperscalers rose from 15% in 2024 to more than 50% in 2025 and should top 60% by the end of 2026, on the back of chips such as AWS Graviton, Google Axion, Microsoft Cobalt and Nvidia's Vera. Rivals in the AI chip market reported the same week: AMD's data center revenue nearly doubled, while Qualcomm reiterated a $5 billion data center target.
Limits#
- The $2 billion is a target over two fiscal years, and no AGI CPU has been commercially delivered yet.
- Arm cites a Signal65 test showing about twice the performance per rack of AMD's EPYC 9755; we have not seen the test's conditions or who paid for it.
- The server share figures are Arm's own estimates.