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Arm Shares Surge on New AI Chip Revenue Forecast

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Arm Holdings shares jumped sharply after the company projected that its upcoming AI-focused data center chip could generate billions in annual revenue.

The stock surged about 20%, while rivals such as Intel and AMD also gained, reflecting broader optimism around CPU demand driven by artificial intelligence.

Arm expects the new chip to deliver roughly $15 billion in yearly revenue within five years, signaling a major shift in its business model. Traditionally focused on licensing chip designs, the company is now moving more directly into chip development.

The new processor is designed for “agentic AI,” a more advanced form of artificial intelligence that can perform complex, multi-step tasks with minimal human input. This shift aligns with growing industry demand for inference computing, where AI systems generate real-time responses and actions.

The announcement underscores how the AI boom is expanding beyond graphics processors—dominated by Nvidia—to include central processing units as a critical component of next-generation infrastructure.

Analysts expect Arm’s server CPU business to become a dominant revenue driver in the coming years, potentially overtaking its traditional smartphone segment as AI workloads reshape the semiconductor market.

Arm to Appeal Court Ruling Upholding Qualcomm’s Victory in Licensing Dispute

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Arm announced on Tuesday that it will appeal a U.S. federal court decision that upheld Qualcomm’s jury victory in a long-running dispute over processor licensing rights, marking the latest escalation in a case with major implications for the semiconductor industry.

The dispute centers on central processor units (CPUs) designed by Qualcomm’s subsidiary Nuvia, which Arm claimed were produced using its technology without proper authorization. In 2023, a Delaware federal jury ruled that Qualcomm’s CPUs were properly licensed under an existing agreement with Arm, handing a key win to the U.S. chipmaker.

The jury sided with Qualcomm on two of three counts, while deadlocking on the third, leading Judge Maryellen Noreika to declare a mistrial on that issue. Arm later sought to have the favorable verdicts for Qualcomm overturned or to secure a new trial, but the judge rejected both requests.

“Arm remains confident in its position in its ongoing dispute with Qualcomm and will immediately file an appeal seeking to overturn the judgment,” the British chip designer said in a statement.

Qualcomm welcomed the decision, framing it as a validation of its innovation rights.

“Our right to innovate prevailed in this case, and we hope Arm will return to fair and competitive practices in dealing with the Arm ecosystem,” said Ann Chaplin, Qualcomm’s general counsel.

The ruling underscores tensions between Arm’s new licensing model and major semiconductor firms that depend on its architecture. Arm provides fundamental chip technology used in processors made by Qualcomm, Apple, and MediaTek, which power billions of smartphones and connected devices worldwide.

The appeal sets the stage for a closely watched legal battle that could influence how chipmakers access and use Arm’s core intellectual property in future CPU designs.

Arm Reports 14-Fold Growth in Data Center Customers Since 2021 Amid AI Boom

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Arm, the chip architecture company owned by SoftBank, has seen its data center customer base soar to 70,000—a 14-fold increase since 2021—according to a company statement shared exclusively with Reuters. This growth underscores Arm’s rising influence in the data center chip market, driven largely by demand linked to generative artificial intelligence computing.

Under CEO Rene Haas, Arm has expanded beyond its traditional strength in mobile and PC markets into data center processors, a sector historically dominated by x86 architectures from AMD and Intel. Arm-based chips are prized for their high performance coupled with low energy consumption, making them attractive for large-scale data centers that require efficient, powerful processing.

The company also revealed a 12-fold increase in startups using its chips since 2021, highlighting its growing footprint in emerging technology firms. Arm has benefited from partnerships with major cloud providers like Amazon AWS, Google, and Microsoft, who have developed custom Arm chips for their expansive infrastructure. For instance, Amazon has introduced multiple generations of Arm-based data center processors since 2018, including those optimized for AI workloads.

While the broader semiconductor market has faced challenges, particularly in PC and mobile segments, Arm’s data center growth remains robust, supported by a swelling developer ecosystem. The number of applications running on Arm machines has doubled to 9 million since 2021, and the developer community has grown by 50% to 22 million.

Despite the positive outlook, Arm has refrained from issuing annual financial guidance, citing ongoing trade uncertainties.