Arm Holdings Bets on New AGI AI Chip to Drive Revenue Growth
In Focus
- Arm Holdings projects $15 billion in revenue from the new chip
- The revenue projection caused Arm Holdings stock to soar 13%
- The company is pricing the new AI chip competitively
Arm Holdings stock surged 13.2% in early market trading on March 25, 2026. According to CNBC, the stock jump was triggered by the company’s strong revenue forecast from its first internal processor, the Arm AGI AI chip. The British semiconductor company launched the AGI CPU in San Francisco on March 24, 2026.
New Chip to Boost Revenue Growth
Arm’s semiconductor is expected to spur revenue growth over the next five years. The company expects the AI chip to generate $15 billion by 2031. Speaking during Arms Holdings’ AI chip launch, CEO Rene Haas projected that the company’s annual revenue could reach $25 billion by 2031.
Haas also projected $9 in earnings per share. The five-year revenue projection is almost six times the company’s 2025 annual revenue, which stood at $4 billion. The Arm AGI CPU data center chip is designed to support AI inference.
The company launched the chip as demand for CPU units rises and tech companies capitalize on agentic AI. Previously, the company generated revenue by licensing its instruction sets to other companies.
Arm collected royalties on every processor developed using its chip designs. With the new AI chip, the company will be competing with its customers, which include Microsoft, Nvidia, and Google.
Chip Launch Eases Investor Concerns
Analysts view Arm Holdings’ move to develop its own AI chip as significant for the company. The launch of the data center chip coupled with the company’s strong revenue forecast surprised the market. Analysts say the news will ease investor concerns about the profit margin.
“Arm’s forecasts are well above even the highest of speculated estimates. The $15 billion in revenue forecast would, on those metrics, drive $7.5 billion/ $5 billion in incremental gross/ operating profit, such a significant increase versus prior expectations that we think the market should not worry about the change in margin structure. It is the incremental profit and cash flow that is the driver of shareholder value,” Citi Analysts noted.
The company already has several big techs on its list of first customers. Meta is among the company’s official buyers of the new AI chip. The company has an existing partnership with Arm Holdings to enhance social media personalization.
“It’s a $1 trillion market, and what we’re seeing over and over again is actually our partners coming out and understanding and realizing this is actually great for the industry,” Arm’s Cloud AI Head, Mohamed Awad said in a CNBC interview.
Other tech companies that will be buying Arm’s AI chip are Cloudflare, OpenAI, and SAP.
How Will Arm Position its Chip in the Market?
Arm Holdings is pricing the new AI chip competitively. This will position it as an option for companies that cannot afford to develop chips in-house. CFO Jason Child said the company is selling the processor at about 50% the gross profit.
“It expands our market to include customers that were not interested in an IP model, gives our current customers choice, and for Arm, it creates a much larger profit opportunity,” Child noted.
