Arm says its own AGI CPU could bring in up to $2B, as quarterly revenue hits $1.44B

Arm reported record second-quarter revenue of $1.44 billion, up 27% from a year earlier, and Reuters reported that its third-quarter revenue forecast beat analyst estimates on the back of AI spending.

Licensing growth outpaces royalties in the quarter

In its results release for the quarter ended September 30, Arm called the result its highest ever for a second quarter. Licensing and other revenue rose 50% to $773 million, while royalty revenue came to $670 million. Operating income was $201 million on a GAAP basis and $638 million non-GAAP.

The split matters. Royalties are the recurring income Arm collects as partners ship chips, while licensing is paid up front when customers sign for new designs. Licensing is the larger line this quarter, and the faster-growing one.

The server business and Arm’s own chip

Arm said data center royalties doubled year over year. It put Arm-based server share at the top hyperscalers at more than 50% in calendar 2025, up from 15% in calendar 2024, and said it expects that share to pass 60% by the end of calendar 2026.

The company also said that over the past 90 days its confidence has grown in up to $2 billion of revenue from the Arm AGI CPU across fiscal 2027 and fiscal 2028. Purchase orders extend through calendar 2027, and first commercial deliveries are on track for the fourth fiscal quarter of fiscal 2027. Oracle Cloud Infrastructure announced plans to offer instances based on the chip in 2027.

The $2 billion is a company expectation, not booked revenue, and Arm’s description of demand has not been independently verified.

A customer that is raising money to build

Arm’s story fits a pattern we have followed in recent weeks: AI buildouts are being funded on a very large scale. Oracle, the named cloud partner for the new chip, recently put $20 billion of stock and bonds on the market to pay for its AI expansion. Separately, Marvell agreed to a $115 billion all-stock deal for Lumentum to own more of the AI optics supply chain.

For Arm, the Oracle link shows a change in what it sells. Until now the company was best known for licensing designs and collecting royalties when partners ship chips. Selling a chip under its own name, with deliveries beginning in its next quarter, puts it closer to its customers’ own silicon efforts and ties part of its revenue to how fast cloud operators deploy servers.

What the release leaves open

The release text we could read did not include the third-quarter guidance figure, adjusted earnings or the analyst consensus, so this article does not quote them. Reuters’ own report was available to us only as a headline, which says the outlook was above estimates. The release also carried no verbatim statement from the chief executive that we could cite.

Readers who want to judge the claim should watch two things in coming quarters: whether the first AGI CPU deliveries land on schedule in the fourth fiscal quarter, and whether royalty revenue, the line tied to chips already shipping, speeds up to match the licensing growth.