Key facts
- Arm Holdings forecast second-quarter revenue of $1.38 billion, above analysts' average estimate of $1.34 billion.
- Arm expects second-quarter profit of 47 cents per share, above analysts' expectations of 43 cents per share.
- Arm reported first-quarter revenue of $1.29 billion and adjusted earnings of 45 cents per share, beating expectations.
- Demand for Arm's chip architecture has surged for AI data centers, boosting licensing revenue and royalties.
- Arm's AGI CPU is exceeding initial expectations, with demand surpassing $2 billion for fiscal years 2027 and 2028.
Arm Holdings forecast second-quarter revenue above Wall Street estimates, signaling strong demand for its energy-efficient chip designs for AI data centers. This follows Microsoft's Azure cloud revenue growth of 43% in the fiscal fourth quarter, which exceeded analyst expectations and eased concerns about AI infrastructure spending.
Arm's chip architecture has seen surging demand as companies like Alphabet and Amazon.com build custom AI chips. This has boosted Arm's licensing revenue and royalties. Royalty revenue rose 22% to $715 million in the first quarter, while licensing revenue grew 23% to $574 million.
The company's AGI CPU, a new AI data center chip unveiled in March, is exceeding initial expectations, with demand now surpassing $2 billion across fiscal years 2027 and 2028. Arm CEO Rene Haas stated that cloud firm Oracle has agreed to buy the new chip, and the company can now secure supply for more than $1 billion worth of chips.
Arm projected second-quarter revenue of $1.38 billion, above analysts' average estimate of $1.34 billion, and expects second-quarter profit of 47 cents per share, compared with analysts' expectations of 43 cents per share. The company reported first-quarter revenue of $1.29 billion and adjusted earnings of 45 cents per share.