Arm stock jumps 16% as company expects revenue windfall from new chip
Rene Haas, CEO of Arm Holdings Plc, holds the AGI CPU chip during the Arm Everywhere event on Tuesday, March 24, 2026 in San Francisco, California, United States.
David Paul Morris | Bloomberg | Getty Images
Arm It rose 16% on Wednesday after the company said its newly released in-house chip would generate $15 billion in revenue alone by 2031.
The British semiconductor and software design firm introduced its first internal chip, the AGI CPU, at an event in San Francisco on Tuesday. The chip is specifically designed for AI inference in data centers, as the demand for central processing units increases with the rise of agency AI.
Arm’s CEO Rene Haas said at the event that the new chip is expected to generate $15 billion in revenue by 2031, with total annual revenue of $25 billion and earnings per share of $9. Its revenue expectation is six times higher than the $4 billion it generates annually in 2025.
The stock closed down 1.5% on Tuesday.
Other chip names also rose on Wednesday. Nvidia, Advanced Micro Devices And Intel They all climb.
For decades, Arm has been licensing its instruction sets to other companies and collecting royalties on each processor built with its designs. However, with its new chip, it is now competing with its own customers. Amazon, Microsoft, NvidiaAnd Google.
‘Significant change’
Arm’s announcement is “the most significant change in the company’s history,” Citi analysts said in a note Wednesday. While the company’s transition to producing chips has been a poorly kept secret, news of a fully developed server chip, support from major firms like Meta and OpenAI, and rising revenue expectations have led to a positive surprise in the market, they said.
Analysts said “Arm’s estimates are well above even the highest speculation estimates” and should ease concerns about a change in the company’s margin structure.
“Based on these metrics, the $15 billion revenue forecast would lead to a $7.5 billion/$5 billion increase in gross/operating profit, an increase so significant compared to prior expectations that we think the market should not worry about the change in margin structure. The drivers of shareholder value are increased profits and cash flow,” they added.
Meta The company, the first official customer of Arm’s new chip, is committing to massive data center construction and plans $135 billion in artificial intelligence-related capital spending this year. OpenAI, Cloudflare and HANDLE is also among its first customers.
“This is a $1 trillion market, and what we see over and over again is that our partners are coming out and understanding this and realizing this is actually great for the industry,” Mohamed Awad, Arm’s head of cloud AI, told CNBC’s Katie Tarasov during an exclusive first look at the chip.
Arm’s CFO Jason Child said it sold its new chip at a gross margin of about 50%, while Awad said it would be “competitively priced” to serve as an option for companies that can’t afford to produce their own chips in-house.
“This expands our market to customers who may not be interested in an IP model, gives our existing customers choice and creates a much larger profit opportunity for Arm,” Child said at Tuesday’s event.
— CNBC’s Katie Tarasov contributed to this report
