By Adam Levine
Arm reported solid fourth-quarter earnings results on Wednesday afternoon. Shares were up sharply in late trading.
Adjusted earnings per share were 60 cents, ahead of Wall Street's consensus estimate of 58 cents, and up from 55 cents last year. Revenue for the quarter reached $1.49 billion, better than expectations of $1.47 billion, and up 20% on the year.
Shares of Arm were up 13% in after-hours trading on the news.
Arm stock closed regular Wednesday trading up 13.6% after strong results from competitor, Advanced Micro Devices. AMD doubled its estimate for the size of the server CPU market by 2030. It's a market that Arm is rapidly entering.
This is breaking news. Read a preview of Arm's earnings below and check back for more analysis soon.
On Wednesday afternoon, Arm will report its fourth-quarter earnings as the company moves toward competing directly with its customers by making a data center CPU chip. Its valuation has soared on the news, even though the chip's sales will not be material until fiscal year 2028.
On average, analysts polled by FactSet expect adjusted earnings of 58 cents a share for the quarter, up from 55 cents a year earlier, only a modest rise due to anticipated increased expenses. Quarterly sales are seen at $1.5 billion, rising 19% from 2025.
At its core, Arm makes an instruction set architecture, the most basic interface between CPU chips and software, and it is the major alternative to the x86 architecture used by Intel and Advanced Micro Devices. On top of that, Arm makes designs for the different parts of chips, and it makes money from licensing and royalties from customers like Apple, Nvidia, Samsung, Qualcomm, and others.
Chips based around the Arm instruction set have long been the choice for low-power devices, especially since the first iPhone featured an Arm-based chip from Samsung. The rapid growth of mobile devices has made Arm the most prevalent instruction set in the world and has created a huge ecosystem of chips, software, and developers.
But now Arm CPUs are showing the benefits of balancing performance and energy consumption on more demanding workloads, shipping in Apple Macs, some Windows PCs, and now in data centers, where they are challenging x86 chips. The three major cloud providers--Amazon Web Services, Microsoft Azure and Google Cloud--all have custom Arm CPUs available for customers to rent over the internet.
Nvidia's industry-leading artificial intelligence servers contain 36 Arm-based CPUs of its own design, and Google pairs its Axion CPU with its latest TPU AI chips. Arm chips have become first-class data center workhorses.
But now Arm is doing the once unthinkable: making a data center CPU of its own, for the first time competing directly with its customers. The first chip, called Arm AGI CPU, will ship in servers combined with Meta Platforms' custom AI chip, MTIA, in a setup similar to what Nvidia and Google sell, and there are other customers lined up as well.
The company says that Arm AGI will not become financially material until fiscal year 2028, which ends in March, even if things go well. But in the meantime, the stock has high valuation multiples based on the company's projections of $15 billion in fiscal year 2031 Arm AGI sales. Arm had only $4.7 billion in last-12-months revenue. This has pushed the stock up to a price-earnings ratio for the next 12 months of 93, compared with 21 for the S&P 500 index.
Write to Adam Levine at adam.levine@barrons.com
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May 06, 2026 16:25 ET (20:25 GMT)
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