Arm Holdings reported record revenue and earnings for its fourth quarter and fiscal year ended March 31, 2026, driven by demand for its chips in AI data centers.
Fourth-quarter profit reached $313 million, up from $210 million in the same period a year earlier, according to The Wall Street Journal. The company also forecast first-quarter revenue above Wall Street expectations, according to Reuters.
Shares slid 5.6% in premarket trading on Thursday, as investors grew concerned about whether Arm could deliver enough of its new AGI CPU — a processor built for agentic AI workloads — to satisfy existing orders, overshadowing an otherwise strong earnings report.
According to CEO Rene Haas, supply constraints become a problem beyond the initial $1 billion in orders — the company has the capacity to cover that first tranche but has not yet locked in the manufacturing needed for the next billion dollars of demand. What had been a $1 billion sales target through early 2028 — set earlier this year — has since grown to $2 billion in projected demand, though The Wall Street Journal reported that Arm kept its revenue guidance for the chip flat, citing an inability to fully meet the new level of orders.
Arm’s business model centers on two main income streams: fees paid by chipmakers like Nvidia and Apple to use its intellectual property, and royalties tied to how widely those licensed designs are actually deployed in finished products, according to Reuters.
Executives flagged softness ahead in smartphones, a segment where Arm holds an outsized position — its architecture underlies most handsets sold worldwide. A persistent memory chip shortage has been a drag on the broader mobile market, contributing to higher consumer prices and tepid device sales, according to Reuters.
Analysts at Morgan Stanley flagged two notable data points from the quarter: royalty revenue fell short of what the Street had modeled, and the pace of operating expenditure growth came in slower than the recent trend, which they interpreted as a sign that Arm is moderating its investment in longer-term initiatives, according to Reuters.
Arm, based in Cambridge, England, licenses computing architecture to semiconductor companies worldwide. A big portion of its business depends on royalties tied to the volume of chips shipped using its designs, making it a broad indicator of activity across the global semiconductor industry.
