Arm expects data centers to soon become the company’s primary source of revenue. This shift moves the chip designer’s focus further away from mobile devices and toward AI infrastructure and server technology. According to the company, demand for processors designed for AI workloads is growing particularly rapidly.
This is reported by The Register. The British company Arm originally achieved its dominant position thanks to energy-efficient designs for smartphones and other mobile devices. Meanwhile, major cloud companies are increasingly adopting the architecture for servers and AI applications. Amazon and Microsoft, among others, have already developed their own data center chips based on Arm technology.
The growing focus on AI was highlighted earlier this year with the introduction of a new processor line called AGI. These chips are intended for so-called agentic AI applications, in which AI systems perform tasks and make decisions independently. During the presentation of the quarterly results, CEO Rene Haas announced that customer interest is much greater than initially expected. According to him, Arm has now secured commitments and generated demand worth more than $2 billion for the fiscal years 2027 and 2028.
AI Requires More CPU Capacity
Haas stated that companies are increasingly relying on a combination of GPUs and specialized CPUs for AI infrastructure. Arm sees opportunities here because the new AGI processors feature a large number of computing cores suitable for parallel AI workloads. According to the CEO, the market still underestimates the additional CPU capacity needed for the further rollout of AI services.
Arm expects to eventually generate approximately $15 billion in annual revenue from AI infrastructure. Haas noted that data centers are expected to become the company’s largest business segment soon. He said customers are increasingly looking to place Arm technology at the center of AI data centers.
CFO Jason Child also spoke of strong growth expectations during the presentation. He expects revenue from Arm’s licensing activities to double to approximately $10 billion per year by 2031. Data center applications would account for the largest share of that growth.
The quarterly results show that Arm is currently growing strongly. Revenue for the past quarter came in at $1.49 billion, a 20 percent increase compared to a year earlier. For the full fiscal year, revenue grew by nearly 23 percent to $4.9 billion.
For the current quarter, the company expects revenue of approximately $1.25 billion. However, the largest financial contribution from the new AGI chips is not expected until fiscal years 2027 and 2028, when production and delivery ramp up on a larger scale.
Investors reacted mixed to Arm’s outlook. The stock initially rose sharply after the figures were released, but later gave up a large portion of those gains.