Key Takeaways
- Arm Holdings (ARM) stock is up 99% in 2026 on its push into data center chips, though it sits about half below its June high and slid another 8% after hours on Thursday.
- Arm’s own AGI CPU has more than $2 billion of customer demand, but supply secured for only about $1 billion over fiscal 2027 and 2028.
- Intel’s (INTC) report on Thursday showed the same pattern: data center sales up 78%, but shortages and memory costs weighed on its outlook.
- A judge could still let Qualcomm (QCOM) stop paying Arm royalties for five years, and the stock trades above its three-year average multiple, so I’d hold until the Nov. 4 report.
Arm Holdings stock is up 99% in 2026 after closing at $228.77 on Thursday, on a bet that its in-house data center chip, the AGI CPU, becomes a big business. It then slid about 8% after hours, on a night when Intel fell 23% after its own report.
The run hasn’t been a straight line. Arm sits about half below its June peak.
The case for that chip is the same one lifting server CPU makers. When New Street upgraded Intel to Buy on Oct. 26, it said agentic AI is driving a lasting rise in server CPU demand, which is Arm’s market too.
What Exactly Happened
- In March, Arm launched the AGI CPU, the first chip it sells as its own silicon.
- In the fiscal first quarter (to June), revenue rose 22% to $1.29 billion, and data center royalties more than doubled again.
- AGI CPU demand tops $2 billion across fiscal 2027 and 2028, and CEO Rene Haas said in July that Arm had grown more confident it could beat its initial $1 billion target.
- On Oct. 13, a Delaware jury found Arm breached its license with Qualcomm, but awarded just $1 in damages on each of two claims.
Supply Is the Catch
Arm has secured capacity for about $1 billion of that demand. On the July call, Haas said supply was tight across wafers, substrates, test capacity and memory. Lam Research flagged the same squeeze on Oct. 21, and Arm sank with the chip stocks the next day.
Intel’s results on Thursday showed what that squeeze looks like. Its data center and AI revenue jumped 78% to $7.3 billion, but it guided fourth-quarter revenue to $15 billion to $16 billion, below the roughly $17 billion analysts expected. It blamed a shortage of the advanced substrates used to package its chips, the same part Haas flagged, and a PC slump tied to memory prices. An accident that shut Intel’s Israel factory will also cut about $300 million from fourth-quarter revenue, a one-off that Arm doesn’t share. Intel and Advanced Micro Devices (AMD), both Arm customers, sell server CPUs into the same demand.
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What’s Next: Nov. 4 and a Judge
Arm reports its fiscal second quarter after the close on Nov. 4. It has guided to $1.38 billion of revenue, give or take $50 million, with royalties up in the low teens. The bigger tells are whether Arm still has capacity lined up for its first $1 billion of chip sales, and whether memory costs are still hurting phone demand, as Arm warned in July.
Judge Maryellen Noreika still has to decide whether the breach lets Qualcomm stop paying Arm royalties for five years. Qualcomm was about $443 million of Arm’s revenue in fiscal 2026, equal to about half its operating income.
Hold, and Wait for Nov. 4
Arm traded at about 95x forward earnings earlier this week. That’s less than half its June peak of 202x, but still above its three-year average of 85x.
Analysts expect revenue to rise 23% to $6.06 billion in fiscal 2027, then to $8.27 billion in fiscal 2028.
That growth leans on chips, which earn far less than licenses: analysts see gross margin falling from 98% in fiscal 2026 to about 91% in fiscal 2028.
The mean analyst target has climbed from $158 a year ago to $291, about 27% above Thursday’s close.
Neither, for now. The chip demand looks real, and Intel’s 78% data center jump says the CPU side of AI spending is too. But Intel also showed how shortages can cap a strong quarter, and at about 95x forward earnings, Arm’s price already assumes it gets its chips built. I’d add if Nov. 4 keeps the $1 billion of capacity in place and Noreika strikes the five-year clause. Her ruling has no date yet, and five years without Qualcomm’s royalties would weigh on earnings well past one good quarter.
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