- Company name
- Arm Holdings
- Sector
- Semiconductor IP & data center CPUs
- About
- Arm designs the Arm processor architecture and licenses processor designs to chip companies. Partners shipped more than 10 billion Arm-based chips in Q2 fiscal 2027, for smartphones, PCs, data center servers, cars and other devices. Arm earns license fees when a partner gets access to a design, and royalties for each chip that partners ship. In March 2026, it started to sell its own chip, the Arm AGI CPU for AI data centers, with Meta as lead partner. Revenue was $4.92 billion in fiscal 2026, which ended on March 31, 2026: $2.61 billion of royalties and $2.31 billion of license and other revenue. SoftBank Group owned about 86.4% of the shares on May 21, 2026. Arm is based in Cambridge, England, and its American depositary shares (ADSs) trade on Nasdaq, one ADS for each ordinary share.
- Thesis
- The market doubts that Arm's growth in AI data centers can make up for slower royalties from smartphones and for the cost of its move into chips. Royalty revenue grew only 8% in Q2 fiscal 2027, after 22% in Q1, because high memory prices weakened the smartphone market. License revenue grew 50%, but it moves with the timing of large contracts. Arm now sells its own AGI CPU, which competes with some of its partners and has a lower gross margin than licenses. Share-based compensation was $719 million in the first half of fiscal 2027, so free cash flow was only $1,096 million for the 12 months to September 30, 2026. For the gap to close, three things must be true. Royalty growth must recover as more chips use Armv9 and Arm compute subsystems, and data center royalties must keep growing fast. The AGI CPU must start commercial deliveries in Q4 fiscal 2027, as planned, and move toward the more than $2 billion of customer demand that Arm sees across fiscal 2027 and fiscal 2028. Partners must keep using Arm designs while Arm sells its own chips, and the Qualcomm lawsuits must not harm that relationship. The Q3 fiscal 2027 report, expected in early February 2027, is the next test. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a longer smartphone slowdown, which can keep royalty growth low.
- Risks
- Royalty growth slowed to 8% in Q2 fiscal 2027 because high memory prices weakened the smartphone market. Smartphones are a large part of royalties, and a longer slowdown can keep growth low.
Arm now sells its own AGI CPU. This makes Arm a competitor of some partners that buy its licenses, needs supply from manufacturing partners and has a lower gross margin than licenses. If partners move to other designs, such as RISC-V, license and royalty revenue can fall.
Revenue depends on a few customers. The top five customers, including Arm China and SoftBank Group, were about 57% of revenue in fiscal 2026, and Arm China alone was about 16%. Arm and Qualcomm, which was 9% of revenue, are in lawsuits against each other, and Arm appealed a September 2025 ruling for Qualcomm.
SoftBank Group owned about 86.4% of the shares on May 21, 2026. It controls the votes, and Arm uses the exemptions for controlled companies from some Nasdaq governance rules. A large sale of shares by SoftBank can also lower the price.
Share-based compensation was $376 million in Q2 fiscal 2027, more than half of the non-GAAP operating income of $638 million. It lowers free cash flow and adds new shares.
- Balance sheet
- Cash: $3.6B
Debt: $0.0M
Net cash: $3.6B
Debt due within 12 months: $0.0M
Arm has no debt. Cash and cash equivalents were $3,251 million and short-term investments $370 million at September 30, 2026, a total of $3,621 million, up from $3,601 million at March 31, 2026. Total liabilities were $2,326 million, mostly contract liabilities, leases and other operating items. Equity investments were $599 million. Operating cash flow was $1,109 million in the first half of fiscal 2027, and Arm spent $269 million on property and equipment, partly for the AGI CPU. Non-GAAP free cash flow was $1,096 million for the 12 months to September 30, 2026. Arm pays no dividend.
As of 2026-09-30.
- Checkpoints
- Feb 3, 2027 (estimate): Q3 fiscal 2027 results: royalty growth. Pending. Watch: Revenue at or above the guided $1.54 billion, plus or minus $50 million, and faster royalty growth than the 8% of Q2 pass; royalty growth at or below 8% or lower guidance fail.
Q1 2027 (estimate): First commercial AGI CPU deliveries. Pending. Watch: First commercial deliveries in Q4 fiscal 2027, as planned, with demand still above $2 billion for fiscal 2027 and 2028 pass; a delay or lower demand fail.
- Recent events
- 2026-11-04: Arm reported Q2 fiscal 2027 results. Revenue rose 27% to $1,443 million. License and other revenue rose 50% to $773 million, but royalty revenue rose only 8% to $670 million, because memory prices hurt the smartphone market. Data center royalties doubled. Non-GAAP EPS was $0.52. Arm said that first commercial deliveries of the AGI CPU are on track for Q4 fiscal 2027 and that its confidence in up to $2 billion of AGI CPU revenue over fiscal 2027 and 2028 has increased. It guided Q3 revenue of $1.54 billion, plus or minus $50 million, and non-GAAP EPS of $0.56, plus or minus $0.04.
2026-07-29: Arm reported Q1 fiscal 2027 results. Revenue rose 22% to $1.29 billion, royalty revenue rose 22% to $715 million and license revenue rose 23% to $574 million. Non-GAAP EPS was $0.45. Arm said that customer demand for the AGI CPU was more than $2 billion across fiscal 2027 and fiscal 2028 and that it had secured manufacturing capacity for the first $1 billion.
2026-05-06: Arm reported fiscal 2026 results. Revenue rose 23% to a record $4.92 billion, royalty revenue rose 21% to $2.61 billion and license and other revenue rose 25% to $2.31 billion. Non-GAAP EPS was $1.77. Arm said that it is on track toward the forecast of $15 billion for its AGI CPU business that it gave at its Arm Everywhere event.
2026-03-30: Qualcomm filed an amended complaint against Arm Limited in its Delaware lawsuit to add another breach of contract claim, and Arm moved to strike it. Qualcomm was 9% of Arm's revenue in fiscal 2026.
2026-03-24: Arm launched the Arm AGI CPU, its first own chip, for AI data centers. Meta is the lead partner and co-developer, and Arm named Cerebras, Cloudflare, F5, OpenAI, Positron, Rebellions, SAP and SK Telecom as other customers. At its Arm Everywhere event, the CFO gave long-range financial expectations.