Arm shares rally as new AI chip to drive billions in annual revenue
An Arm Holdings AGI CPU chip is displayed at Fort Mason in San Francisco, U.S., March 24, 2026. REUTERS/Max A. Cherney
March 25 - Arm sparked a rally in shares of companies that make central processors on Wednesday with a prediction that its new data-center chip would bring in billions of dollars in annual revenue.
Shares of the SoftBank Group-controlled company soared 20 per cent to their highest since November, while rivals Intel and Advanced Micro Devices also advanced more than 5 per cent each.
Arm expects the data-center chip to generate roughly $15 billion in annual revenue in about five years, CEO Rene Haas said in an interview with Reuters.
Its forecast was the latest sign that rising use of AI technology that can create apps, write computer code and finish presentations with little human intervention would be a boon for CPU makers. The AI boom had so far mostly delivered gains for Nvidia, whose graphics processors are needed for training AI.
Even Nvidia has been responding to the shift and earlier this month unveiled its own CPU chip for AI.
For Arm, the new chip marks a departure for a company that has traditionally relied on licensing its designs to companies such as Nvidia and Qualcomm and then collecting a royalty payment based on the number of units sold.
Unlike current chips that are designed to respond to queries on a chatbot, Arm said its AGI CPU will be able to handle data-crunching needs of "agentic AI".
"Arm has not taken a baby step, say the production of a die or a chiplet for its customers; it has jumped in with both feet, developing the highly performing and energy efficient Arm AGI CPU," Citigroup analysts said.
"The industry move to inference and, in particular, agentic AI is showing the need for more CPUs."
Arm stock was last at $162.10 in morning trading, and poised to add more than $29 billion to its market value.
HSBC analysts forecast that the combination of AGI CPU revenue and server CPU royalties will make fiscal year 2029 "the transitionary period where server CPUs take over smartphones as the dominant contributor" to Arm's overall revenue mix.
Arm is trading at 63.08 times analysts' estimates for the company's earnings for the next 12 months, compared with AMD's 26.64 and Intel's 71.27, according to data compiled by LSEG.
