Arm's quarter shows how it's carving a lucrative path in the crowded CPU resurgence
CNBC • • business
Key Points:
- Arm Holdings reported a fiscal Q4 revenue of $1.49 billion, a 20% year-over-year increase, and non-GAAP EPS of 60 cents, both beating analyst expectations, but its shares fell about 6% in after-hours trading after closing at a record high.
- The company highlighted strong demand for its Arm-based data center CPUs, particularly driven by the AI industry's shift towards more CPU usage alongside GPUs, with over $2 billion in customer demand forecasted for fiscal years 2027 and 2028.
- Arm's first in-house data center CPU, designed for agentic AI workloads, is gaining traction among major hyperscalers, with the largest AI accelerator providers pairing their chips with Arm-based CPUs, underscoring Arm's growing influence in the market.
- Despite strong revenue growth from licensing and royalties, Arm faces supply chain constraints that could limit near-term growth, but the company maintains a positive outlook with expected continued double-digit revenue growth and a price target of $250.
- For fiscal Q1 2027, Arm projects revenue around $1.26 billion and non-GAAP EPS of 40 cents, slightly above consensus estimates, while operating expenses are expected to be somewhat higher than forecasted.
