Systems
Datacenter to become Arm’s biggest business ‘soon’
Someone other than Meta is buying $1bn of its new AGI chips
Chip design company Arm says the datacenter will soon be its biggest source of revenue.
Arm rose to prominence as a purveyor of chip designs for low-powered devices and then became the de facto standard for smartphone processors. In recent years, the company created more powerful chips, and datacenter players took note: Amazon and Microsoft built their own datacenter silicon on Arm designs.
In March, Arm announced a new CPU design called “AGI” aimed at powering agentic AI applications. During its Q4 FY 2025/26 earnings call on Wednesday, CEO Rene Haas said “Customer response to the Arm AGI CPU has been very strong. We now have more than $2 billion of customer demand across fiscal 2027 and fiscal 2028. This is more than double what we stated at launch.”
The CEO also admitted that Arm is yet to assemble the supply chain to deliver $2 billion worth of AGI silicon – but is working to get that right.
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Haas theorized one reason for customer interest is that they see AI agents running on dedicated processor cores and Arm’s AGI chips have 136 of them. He thinks datacenter operators will therefore run racks full of Arm CPUs alongside racks full of GPUs.
“I think one thing we know for sure is that we probably have under-called the CPU demand in terms of the transition here,” Haas said.
He then said Arm is “on track towards our forecast of $15 billion” annual revenue for AI infrastructure , and added: “Soon, the datacenter will be Arm’s largest business. The direction is clear. Customers want Arm at the center of the AI datacenter.”
CFO Jason Child chimed in with a prediction Arm is also on track to double annual revenue from selling its IP to $10 billion by 2031, with most of that coming from datacenter products.
Revenue for the company’s most recent quarter landed at $1.49 billion, up 20 percent year-over-year. Full-year revenue of $4.9 billion represented a 22.8 percent increase.
The company forecast $1.25 billion revenue for its current quarter, and said cash from AGI chip sales will start to arrive in volume starting FY 27/28.
Investors weren’t quite sure what to make of this, first sending the company’s share price up ten percent above its $237 close, before pushing it down to $222. ®
