Arm Holdings: Data Center Royalty Grows 2X Again, AGI CPU Revenues To Cross $1 Billion

Shares of Arm Holdings PLC (NASDAQ: ARM ) rallied on Thursday after the company reported its fiscal first-quarter results.

Here are the key analyst takeaways: JPMorgan analyst Harlan Sur maintained an Overweight rating, while raising the price target from $240 to $255.

Needham analyst Charles Shi reiterated a Buy rating and price target of $255.

Check out other analyst stock ratings.

JPMorgan: Arm Holdings delivered "a clean beat," driven by data center royalty revenues growing more than 100% year-on-year for the second consecutive quarter due to continued server CPU deployment at hyperscalers, Sur said in a note.

Revenues grew 22% year-on-year to $1.29 billion, while earnings came at 45 cents per share, both exceeding consensus estimates of $1.26 billion and 40 cents per share, respectively, he added.

Management’s September-quarter revenue guidance of $1.38 billion implies continued year-on-year growth of around 22%, the analyst stated.

This implies that fiscal 2027 revenue outlook improves modestly to around $6.0 billion, from the prior projection of about $5.9 billion, he further noted.

The company is cementing its position as an AI-era compute platform and revenues from AGI CPU (Arm’s first in-house produced silicon chip built specifically for agentic AI, cloud data centers, and high-density infrastructure) are poised to surpass $1 billion through fiscal 2028, Sur said.

Needham: Arm Holdings indicated possible headwinds in smartphones, with unit forecast being cut due to memory cost issue, Shi said.

Then company expects AGI CPU demand to increase further, with strong interests from both the US and China, he added.

Management has maintained its AGI CPU revenue forecast for fiscal 2027 and 2028, while expressing confidence in Arm Holdings being able to secure supplies for a higher revenue number, the analyst stated. "Management also sees potential upside in royalty revenue as cloud/AI growth momentum is very strong," he further wrote.

ARM Price Action: Shares of Arm Holdings had risen by 6.34% to $239.14 at the time of publication on Thursday.

Read Also: Arm Holdings Stock Surges After Strong Q1 Earnings