ARM Holdings plc

NASDAQ: ARM  |  IP Semiconductor Licensing  |  Cambridge, UK  |  FY ends March 31  |  Report: 7 July 2026
SIC 3674  |  Foreign Private Issuer FY2026 Revenue: $4,920M Growth: +22.8% YoY  |  Gross Margin: 97.5%
Revenue FY2026
$4.92B
+22.8% YoY
Gross Margin
97.5%
+50bps YoY
Non-GAAP Op Margin
43.0%
-370bps YoY
Non-GAAP EPS
$1.77
+8.6% YoY
Non-GAAP FCF
$882M
+8.9x YoY
Cash + ST Inv.
$3.60B
+27.5% YoY
ACV
$1.66B
+21.5% YoY
Employees
9,584
as of Mar 2026
1. Company Overview
Founded
1990
Cambridge, UK
Listed
Sep 2023
NASDAQ: ARM
CEO
Rene Haas
since 2022
CFO
Jason Child
since 2024
Employees
9,584
Mar 31, 2026
Controlling Shareholder
SoftBank
~75-80% stake
ARM Holdings plc (NASDAQ: ARM) is the world's dominant semiconductor IP licensor, headquartered in Cambridge, UK. ARM designs the foundational instruction set architectures (ISAs) and processor cores that power the overwhelming majority of mobile, embedded, and increasingly data-center chips globally. ARM does not manufacture silicon — it licenses its intellectual property to over 500 partners who design and sell chips incorporating ARM technology. Revenue is generated through two streams: (1) License and Other Revenue — upfront fees for access to ARM's IP and technology, and (2) Royalty Revenue — a per-chip royalty collected on every ARM-based chip shipped by licensees. ARM's IP is estimated to be present in approximately 99% of smartphones globally, and is rapidly expanding into data centers, AI accelerators, and automotive. The company went public in September 2023 in one of the largest tech IPOs in history; SoftBank Group Corp. retains controlling ownership.
2. Business Overview

ARM operates a pure IP licensing model — the most asset-light business model in semiconductors. Its core product is the ARM instruction set architecture (ISA) and associated CPU cores (Cortex-A, Cortex-M, Cortex-R series), GPU and NPU designs (Mali, Immortalis), and system IP. Customers (called licensees) pay a license fee to access this IP, then independently design chips incorporating ARM technology, manufacture them (or contract manufacturing), and sell to end markets. ARM collects a royalty on every unit shipped.

Two revenue segments: (1) License & Other Revenue ($2,307M in FY2026, +25.5% YoY) covers technology access fees, engineering services, and subscription licenses (Arm Total Access and Arm Flexible Access). (2) Royalty Revenue ($2,613M in FY2026, +20.5% YoY) are per-chip royalties on ~30 billion ARM-based chips shipped annually.

Subscription licensing evolution: ARM has shifted licensing to subscription models: Arm Total Access (ATA) gives licensees all-inclusive access to ARM's current and future IP for a fixed annual fee (56 ATA licensees as of FY2026), while Arm Flexible Access (AFA) provides modular access on a pay-as-you-go basis (329 AFA licensees). ACV (Annualized Contract Value) reached $1.66B in FY2026, reflecting the growing predictable revenue base. RPO (Remaining Performance Obligations) of $2.07B represents future contracted license revenue.

Arm AGI CPU: In Q4 FY2026, ARM unveiled its first proprietary silicon product — the Arm AGI CPU — a data-center processor designed for agentic AI workloads. Meta announced as the lead deployment partner; ARM reported over $2B of committed demand from customers for FY2027-FY2028. This represents a strategic expansion beyond pure IP licensing toward higher-value compute solutions.

Arm China risk: Arm Technology (China) Co. Limited ("Arm China") is the exclusive sublicensor for PRC licensees and contributed approximately 18% (~$885M) of FY2026 revenue. ARM does not control Arm China operationally; this represents both a concentration risk and a geopolitical risk.

3. KPIs & Revenue by Segment & Geography
License & Other Revenue (FY2026)
$2,307M
▲ +25.5% YoY
Royalty Revenue (FY2026)
$2,613M
▲ +20.5% YoY
Total Revenue (FY2026)
$4,920M
▲ +22.8% YoY
ACV (FY2026)
$1,660M
▲ +21.5% YoY

Annual Revenue by Segment ($M) — FY2024 to FY2027E

Source: ARM 20-F FY2026 (filed 2026-05-26) & 6-K press releases. Estimates from company guidance.
Segment FY2024FY2025FY2026 TTM FY2027EFY2028EFY2029E
License & Other Revenue$1,552M$1,839M$2,307M$2,307M$2,800M$3,500M$4,200M
Royalty Revenue$1,679M$2,168M$2,613M$2,613M$3,200M$4,000M$4,800M
Total Revenue$3,231M$4,007M$4,920M$4,920M$6,000M$7,500M$9,000M
YoY Growth+24.0%+22.8%+22%E+25%E+20%E

TTM = FY2026 annual (period ending March 31, 2026). Estimates based on company guidance and analyst consensus.

Quarterly Revenue by Segment ($M) — Q1-Q4 FY2026 + Q1-Q2 FY2027E

Darker fill = actuals from 6-K filings. Lighter fill = Q1-Q2 FY2027E from management guidance.
QuarterLicenseRoyaltyTotal
Q1 FY2026 (Apr-Jun 2025)$468M$585M$1,053M
Q2 FY2026 (Jul-Sep 2025)$515M$620M$1,135M
Q3 FY2026 (Oct-Dec 2025)$505M$737M$1,242M
Q4 FY2026 (Jan-Mar 2026)$819M$671M$1,490M
Q1 FY2027E (Apr-Jun 2026)$660M$600M$1,260M
Q2 FY2027E (Jul-Sep 2026)$700M$650M$1,350M

Source: ARM 6-K filings Q2/Q3/Q4 FY2026. Q1 FY2026 derived: 9M FY2026 less Q2+Q3. Estimates from Q4 FY2026 earnings guidance (6-K filed 2026-05-06).

Annual Revenue by Geography ($M) — FY2024 to FY2026 + TTM

Source: ARM 20-F FY2026; geographic breakdown per Note on Disaggregation of Revenue.
RegionFY2024FY2025FY2026TTM
United States$1,228M$1,703M$1,734M$1,734M
China (PRC incl. Arm China)$711M$761M$885M$885M
Japan$194M$295M$780M$780M
Taiwan$517M$648M$710M$710M
Republic of Korea$291M$351M$453M$453M
Rest of World$290M$249M$358M$358M
Total$3,231M$4,007M$4,920M$4,920M

Japan surge in FY2026 reflects large licensing agreements with Japanese chipmakers (Renesas, Toshiba ecosystem). US slowdown in FY2026 is timing-related. Source: ARM 20-F FY2026.

4. Key Financial Metrics
Metric FY2024FY2025FY2026 TTM FY2027EFY2028EFY2029E
Revenue ($M)3,2314,0074,9204,9206,0007,5009,000
Revenue Growth+24.0%+22.8%+22%E+25%E+20%E
Gross Profit ($M)3,1023,8864,7994,7995,8807,3508,820
Gross Margin96.0%97.0%97.5%97.5%98.0%E98.0%E98.0%E
GAAP Operating Income ($M)645831900900n.a.n.a.n.a.
GAAP Operating Margin20.0%20.7%18.3%18.3%n.a.n.a.n.a.
Non-GAAP Op. Income ($M)1,3951,8712,1152,1152,7603,4504,140
Non-GAAP Op. Margin43.2%46.7%43.0%43.0%46.0%E46.0%E46.0%E
GAAP Net Income ($M)700792904904n.a.n.a.n.a.
GAAP EPS (Diluted)$0.67$0.75$0.85$0.85n.a.n.a.n.a.
Non-GAAP EPS (Diluted)$1.33$1.63$1.77$1.77$2.00E$2.50E$3.00E
Non-GAAP FCF ($M)15099882882n.a.n.a.n.a.
Cash + ST Investments ($M)2,4002,8253,6013,601n.a.n.a.n.a.
Total Debt ($M)0000000
ACV ($M)n.a.1,3651,6601,660n.a.n.a.n.a.
RPO ($M)n.a.2,2262,0712,071n.a.n.a.n.a.

Source: ARM 20-F FY2026, 6-K Q4 FY2026 press release (filed 2026-05-06). Non-GAAP figures exclude stock-based compensation and acquisition-related amortization.

Metric Q1 FY2026Q2 FY2026Q3 FY2026Q4 FY2026 Q1 FY2027EQ2 FY2027E
Total Revenue$1,053M$1,135M$1,242M$1,490M$1,260M$1,350M
QoQ Growth+7.8%+9.4%+20.0%-15.4%E+7.1%E

Q1 FY2026 derived: 9M FY2026 actuals less Q3 and Q2. Q1 FY2027E midpoint of guidance range. Source: 6-K filings.

Non-GAAP Free Cash Flow ($M)

FY2022–FY2024 estimated; FY2025–FY2026 from 6-K press release.

Gross Margin Trend (%)

ARM near-100% gross margin reflects pure IP model with no COGS (no manufacturing).
5. Demand Drivers
1

AI & Data Center Compute Explosion

AI training and inference are consuming exponentially more compute. ARM-architecture CPUs (NVIDIA Grace, Amazon Graviton, Microsoft Cobalt) are displacing x86 in data centers due to superior performance-per-watt. ARM's Neoverse platform is gaining significant data center penetration, with hyperscalers including AWS, Microsoft, Google, and Meta deploying ARM-based custom silicon. The Arm AGI CPU (launched Q4 FY2026) targets agentic AI workloads with $2B+ in committed demand.

2

Smartphone Volume & ASP Upgrade Cycle

ARM's royalty revenue is tied directly to chip shipments. The global smartphone market is estimated at 1.2-1.3 billion units annually. ARM generates royalties on every application processor, modem, and SoC. Premium smartphone ASPs have risen as AI features are added, shifting shipment mix toward higher-royalty-rate Armv9 architecture (royalty rate approximately 2x of Armv8). Armv9 adoption across Qualcomm Snapdragon, MediaTek Dimensity, and Apple A-series is a structural royalty rate tailwind.

3

Automotive & ADAS Proliferation

Modern vehicles contain 50-100+ processors; next-generation autonomous vehicles may contain 200+. ARM's Cortex-R and Cortex-A designs are deeply embedded in automotive MCUs and SoCs (NXP, Renesas, STMicroelectronics, NVIDIA DRIVE). The automotive semiconductor TAM is projected to grow from ~$50B to $100B+ by 2030. ARM highlighted automotive as a key royalty growth driver in its 20-F, with more complex ARM cores being adopted in safety-critical applications commanding higher royalty rates.

4

IoT & Embedded Proliferation

IoT chip shipments are projected to reach 40-50 billion units annually by 2030, with the vast majority using ARM Cortex-M (ultra-low-power) or Cortex-A architectures. While per-chip royalties are small for IoT devices, the sheer volume creates a durable, diverse royalty revenue base. ARM has approximately 300+ active Cortex-M licensees, ensuring broad design activity.

5

Custom Silicon & Vertical Integration by Hyperscalers

The trend of hyperscalers designing their own chips (Apple M-series, AWS Graviton/Trainium/Inferentia, Google TPU/Axion, Microsoft Cobalt, Meta MTIA) is a net positive for ARM, as all these custom chips use ARM cores. Custom silicon design typically involves high-value Total Access licenses, contributing to ACV growth. Each new hyperscaler chip design requires a new or renewed ARM license agreement.

6

Armv9 Architecture Royalty Rate Uplift

The transition from Armv8 to Armv9 architecture (launched 2021, now entering mass production) carries approximately 2x higher royalty rates. As smartphones, servers, and automotive designs migrate to Armv9, ARM's blended royalty rate per chip shipped is structurally improving. Management stated in Q4 FY2026 that Armv9 is now the primary architecture for flagship smartphone chips. This royalty rate uplift compounds the volume growth to drive total royalty revenue higher.

6. Growth Strategy

1. Arm Total Access — Subscription Licensing Expansion

ARM is converting the industry from per-design perpetual licenses to annual subscription access (ATA). ATA licensees pay a recurring annual fee for unlimited access to all current and future ARM IP. This creates more predictable revenue (ACV) and aligns ARM's economics with licensee R&D activity rather than individual tape-outs. With 56 ATA licensees as of FY2026 (up from 38 two years prior), ARM targets continued ATA adoption, particularly among semiconductor startups and fabless design houses building AI chips. Goal: ACV growth of 20%+ annually.

2. Data Center & AI Compute Penetration (CSS — Compute Subsystems)

ARM's Compute Subsystem (CSS) for data centers provides fully validated, production-ready chip building blocks for hyperscalers and cloud providers. CSS reduces chip design time from ~3 years to ~18 months, significantly lowering the barrier to custom ARM-based silicon. ARM's Neoverse platform (N-series, V-series cores) is purpose-built for cloud compute. The Arm AGI CPU (Q4 FY2026 launch) marks ARM's first step into proprietary compute products — with Meta as lead partner and $2B+ in FY2027-28 demand, it signals a strategic shift toward higher-margin system-level products.

3. Armv9 Architecture Ramp & Royalty Rate Improvement

Management's stated strategy is to accelerate Armv9 adoption across all end markets. Higher Armv9 royalty rates (approximately 2x v8) are the single largest lever for royalty revenue growth beyond volume. ARM works directly with licensees to roadmap Armv9 transition timelines and has embedded new Armv9-specific security (MTE) and AI (SVE2) features that make the upgrade compelling.

4. Automotive Design Win Acceleration

ARM has established dedicated automotive IP teams and partnerships with Tier-1 suppliers. The strategy focuses on winning ADAS SoC designs (Mobileye, NVIDIA DRIVE, Renesas R-Car) which carry the highest royalty rates due to complexity and safety criticality. ARM sees automotive as a decade-long royalty revenue ramp as designed chips (2024-2026 design wins) enter production (2028-2032).

5. Ecosystem & Software Tools Investment

ARM invests heavily in developer tools (Arm Development Studio, Keil), security frameworks (TrustZone, CCA), and software standards to maintain ecosystem lock-in. By being the standard for compiler toolchains (GCC, LLVM support ARM natively), operating systems (Linux, Android, Windows on ARM, macOS), and cloud hypervisor compatibility, ARM creates switching costs that are independent of any individual chip design. The Arm Ecosystem Software program, launched in FY2025, provides financial support to ISVs developing ARM-native software.

6. Arm AGI CPU & Proprietary Products

The Arm AGI CPU represents ARM's boldest strategic move — becoming a chip designer itself rather than purely an IP licensor. This product targets data-center agentic AI, integrating ARM cores with ARM-designed memory controllers and AI accelerator IP in a reference chiplet design. With Meta committed as lead partner and $2B+ in FY2027-28 bookings, success would open an entirely new revenue stream (product revenue) alongside existing licensing/royalty. This also gives ARM real-world validation of its IP and strengthens future licensing negotiations.

7. Latest News (6-K Filings)
May 2026

FY2026 Full Year Results — Record Revenue $4.92B (+22.8%)

ARM reported FY2026 annual revenue of $4,920M, its fourth consecutive year of 20%+ growth. GAAP net income of $904M (+14.1%). Non-GAAP EPS of $1.77. Non-GAAP FCF surged to $882M (from $99M in FY2025), reflecting Q4 FY2026 cash collection from large license agreements. Q4 FY2026 revenue was $1,490M, the highest quarterly revenue in ARM's history. Q1 FY2027 guidance: $1,225M to $1,295M (midpoint $1,260M). Source: 6-K filed 2026-05-06.

May 2026

Arm AGI CPU Launch — $2B+ FY2027/28 Committed Demand, Meta as Lead Partner

ARM announced the Arm AGI CPU, its first proprietary data-center silicon product designed for agentic AI inference workloads. Meta committed to being the lead deployment partner. ARM reported over $2 billion in committed customer demand for the product across FY2027 and FY2028. The AGI CPU uses ARM's most advanced Neoverse V3 cores combined with custom memory subsystems. This marks ARM's strategic expansion beyond IP licensing into compute products. Source: ARM 20-F FY2026, Sec. 4 (Business Overview).

Feb 2026

Q3 FY2026 Results — Revenue $1,242M, Royalty Accelerates

ARM posted Q3 FY2026 (Oct-Dec 2025) revenue of $1,242M (+19.0% YoY), with royalty revenue of $737M (+33% YoY) driven by strong AI smartphone chip shipments and Armv9 adoption. License revenue of $505M was in line. Q4 FY2026 guidance set at $1,425M to $1,525M. Non-GAAP EPS of $0.39 for Q3. Cash position grew to $3.4B+. Source: 6-K filed 2026-02-04.

Nov 2025

Q2 FY2026 Results — Revenue $1,135M, ATA Licensees Reach 50+

ARM reported Q2 FY2026 (Jul-Sep 2025) revenue of $1,135M. Arm Total Access licensees exceeded 50, with ACV growing to $1.5B+ (run-rate). Management highlighted strong demand from AI chip startups signing ATA agreements. Q3 FY2026 guidance midpoint: $1,225M. License revenue $515M included a multi-year data center CSS agreement with a major cloud provider. Source: 6-K filed 2025-11-05.

2026

SoftBank Ownership — No Change to ~75-80% Stake

SoftBank Group Corp. retained its controlling stake in ARM of approximately 75-80% as of March 31, 2026 (per ARM 20-F FY2026 cover page, shares outstanding 1,064M). No secondary offerings or share sales by SoftBank were reported in FY2026. The public float remained approximately 20-25%. SoftBank's SB Investment Advisers continues to have board representation. Source: ARM 20-F FY2026.

8. Key M&A & Corporate Events

Proprietary SiliconArm AGI CPU — First Proprietary Chip Product (Q4 FY2026)

ARM internally developed and launched the Arm AGI CPU, a data-center AI inference processor. This is not a traditional M&A event but represents the most significant corporate strategic pivot since ARM's founding — from pure IP licensor to chip product company. Deal value: internal R&D investment (not disclosed separately in 20-F). Financial impact: $2B+ in committed revenue for FY2027-28. Lead partner: Meta Platforms. This product competes/complements NVIDIA, AMD, Intel, and custom hyperscaler silicon in the AI data center market. Source: ARM 20-F FY2026.

IPONASDAQ IPO — September 2023 ($54.50/share, ~$65B initial market cap)

ARM Holdings listed on NASDAQ on September 14, 2023 at $54.50 per share, raising approximately $4.87B in the IPO (SoftBank sold existing shares, ARM raised a portion for balance sheet). This was one of the largest tech IPOs since 2021. SoftBank retained approximately 90% of shares post-IPO; public float was approximately 10% at listing, growing to ~20-25% by FY2026. The IPO created a currency for employee compensation and potential future acquisitions. Source: ARM S-1/20-F filings.

Failed M&ANVIDIA Acquisition Attempt — Abandoned February 2022 ($40B)

NVIDIA announced in September 2020 its intent to acquire ARM from SoftBank for approximately $40B. The transaction was terminated in February 2022 after regulators in the UK (CMA), EU, US (FTC), and China raised competition concerns. The failed acquisition ultimately led to ARM's IPO in 2023. There was no financial impact on ARM's operations. Source: ARM 20-F FY2026, Item 8 (History).

DivestitureArm China — Restructured as Independent Entity (2020-2022)

ARM's China operations were restructured into Arm Technology (China) Co. Limited, an independent entity in which ARM holds a minority stake. Arm China serves as the exclusive sublicensor of ARM IP in the PRC. This structure creates significant risk: ARM does not control Arm China's operations, finances, or sublicensing decisions. Arm China contributed approximately $885M (18%) to ARM's FY2026 revenue. A leadership dispute at Arm China was resolved in 2022 after ~2 years of operational disruption. Source: ARM 20-F FY2026, Risk Factors.

9. Business Risks
HIGH

Arm China Concentration & Control Risk

Arm China (not controlled by ARM) generates ~18% of revenue. ARM cannot compel Arm China to pay royalties, enforce IP restrictions, or audit its financials with full independence. Geopolitical deterioration or management conflict could materially impair this revenue. Source: 20-F FY2026, Risk Factors Item 3D.

HIGH

US-China Geopolitical & Export Controls

US export restrictions (BIS Entity List, Commerce Rule changes) could restrict ARM from providing technology updates to Chinese licensees. PRC chip development could accelerate RISC-V adoption as an alternative. Any escalation materially threatens the $885M PRC revenue stream. Source: 20-F FY2026.

HIGH

SoftBank Controlling Shareholder Risk

SoftBank (~75-80% ownership) has the power to elect the board, approve strategic decisions, and potentially sell ARM or merge it with SoftBank portfolio companies. Minority shareholder rights are limited. SoftBank's own financial position (debt, investment portfolio) could create pressure to monetize its ARM stake. Source: 20-F FY2026.

HIGH

RISC-V Open-Source Architecture Competition

RISC-V is a free, open-source ISA growing rapidly in IoT, embedded, and increasingly server markets. Chinese chipmakers are aggressively adopting RISC-V partly to reduce ARM dependency. While RISC-V does not yet threaten ARM's premium smartphone/data center position, sustained adoption could erode ARM's addressable market and royalty volume over a 5-10 year horizon. Source: 20-F FY2026, Risk Factors.

MEDIUM

Royalty Revenue Cyclicality

Royalty revenue depends on licensee chip shipments, which track global semiconductor cycles. A smartphone downturn (e.g., 2022-2023 inventory correction) reduces royalty revenue with 2-3 quarters lag. ARM has limited ability to offset cyclical royalty declines with licensing (though ACV provides some buffer). FY2025 royalty growth benefited from recovery; a new inventory cycle could depress FY2027-28 royalties. Source: 20-F FY2026.

MEDIUM

Customer Concentration — Apple, Qualcomm, Samsung

A small number of licensees (Apple, Qualcomm, Samsung, MediaTek) collectively represent a disproportionate share of ARM's royalty revenue. Loss of any of these licensees (e.g., Apple developing its own ISA) or a major dispute (ARM sued Qualcomm in 2022 over license terms — settled) could materially impair royalty revenue. Source: 20-F FY2026.

MEDIUM

ARM AGI CPU Execution Risk

The Arm AGI CPU is ARM's first proprietary silicon product. Chip development carries significant execution risk: yield issues, performance shortfalls, customer integration delays. ARM has no experience managing a silicon product supply chain (fab relationships, packaging, logistics). Failure would embarrass ARM and could undermine customer confidence in ARM as an IP partner. Source: 20-F FY2026.

LOW

Valuation & Stock Volatility

ARM trades at ~75x non-GAAP P/E and 28x EV/Revenue — among the highest multiples in semiconductors. The stock is highly sensitive to earnings guidance and macro interest rate changes. A miss on royalty revenue or AGI CPU delays could cause a significant multiple compression. This is an investor risk, not a business risk, but worth noting for position sizing. Source: Calculated from 20-F FY2026 data.

10. Competitor Analysis

Revenue Comparison — ARM vs QUALCOMM vs Intel ($M)

ARM revenue is pure IP licensing. QUALCOMM includes semiconductor + technology licensing. Intel is an IDM (design + manufacturing). Not directly comparable but illustrates scale.
CompanyTickerRevenue FY2024Revenue FY2025Revenue FY2026Gross MarginMarket Cap (approx)EV/Revenue
ARM HoldingsARM$3,231M$4,007M$4,920M97.5%~$143B28.3x
QUALCOMMQCOM$35,820M$38,962M$44,284M57.0%~$160B~3.8x
IntelINTC$54,228M$53,101M$52,853M42.5%~$100B~2.0x

ARM is the only pure IP licensor in this comparison. QUALCOMM designs and sells chips (also licenses via QTL division). Intel is a vertically integrated manufacturer. ARM's 97.5% gross margin and 28x EV/Sales reflect its zero-capital-intensity IP model. Competitor financials from public SEC filings; approximate FY2026 estimates. Sources: QCOM 10-K FY2025, INTC 10-K FY2024, ARM 20-F FY2026.

Competitive moat: ARM's true competitive advantage is its ecosystem — the self-reinforcing network of >15,000 ARM-trained engineers, >1,000 licensees, compilers, OS support, and toolchains accumulated over 34 years. An alternative ISA (RISC-V, x86) faces not just technical hurdles but billions of dollars and decades of ecosystem rebuild. This moat makes ARM's position in smartphones, embedded, and increasingly data centers nearly unassailable in the short-to-medium term. The primary competitive risk is from RISC-V in China over a long time horizon.

11. Bull & Bear Analysis
▲ Bull Case
  • Near-monopoly IP licensor: ARM's architecture is present in ~99% of smartphones and a growing share of data center chips. There is no credible short-term alternative — switching costs are measured in years and billions of dollars of re-engineering. This translates into durable, compounding royalty revenue.
  • Armv9 royalty rate uplift is just beginning: Armv9 adoption is accelerating across premium smartphones and data center chips. With ~2x royalty rate vs Armv8, the blended royalty per chip is structurally improving. As Armv9 penetrates mid-range handsets (2026-2028), royalty revenue could grow faster than unit volumes.
  • Arm AGI CPU — $2B+ backlog, blue-chip partners: The AGI CPU launch with Meta as lead partner represents a transformational revenue opportunity. If it executes, ARM moves from IP licensor to compute product company, potentially unlocking 10x higher revenue per deployed cluster vs. pure royalties.
  • ACV / subscription revenue base provides visibility: ACV of $1.66B (+21.5% YoY) and RPO of $2.07B give multi-year revenue visibility. The shift to Total Access subscriptions means a growing portion of revenue is contracted, smoothing royalty cyclicality and making ARM's financials more predictable.
  • Data center AI spend is a decade-long tailwind: Every major hyperscaler (AWS, Microsoft, Google, Meta) is building ARM-based custom silicon for AI inference. ARM benefits from both the licensing fees (Total Access) and the royalties on every chip shipped. AI chip volumes are growing at 40-50%+ annually, and ARM is the architecture of choice for CPU + NPU combinations.
▼ Bear Case
  • Extreme valuation — 75x non-GAAP P/E, 28x EV/Sales: ARM is priced for perfection. At these multiples, any deceleration in growth, AGI CPU delays, or royalty cycle weakness would cause severe multiple compression. The stock already trades at a premium to NVIDIA on revenue multiples, despite having less control over end demand.
  • Arm China (18% of revenue) is a structural time bomb: ARM does not control Arm China, cannot fully audit it, and cannot prevent sublicensing disputes. US-China tensions escalating further could force ARM to restrict technology updates, triggering a legal and commercial dispute with Arm China. Any disruption to the $885M revenue stream could be sudden and severe.
  • RISC-V threatens long-term relevance in China: Chinese chipmakers (Alibaba's T-Head, domestic university designs) are aggressively investing in RISC-V to reduce ARM dependency. If China mandates RISC-V for domestic chip designs (via policy or export controls forcing ARM's hand), the long-term royalty revenue from China could permanently impair. China represented 18% of FY2026 revenue.
  • Non-GAAP operating margins declining: Non-GAAP operating margin fell from 46.7% in FY2025 to 43.0% in FY2026 as ARM invests heavily in AGI CPU development and headcount. If the AGI CPU requires ongoing heavy R&D investment without near-term revenue contribution, margins could remain under pressure, disappointing investors expecting operating leverage.
  • AGI CPU is unproven — no chip design track record: ARM has never designed, manufactured, or sold a proprietary chip product. The AGI CPU requires ARM to manage fab relationships, packaging, logistics, and customer integration for the first time. Execution missteps — tape-out delays, yield issues, performance shortfalls — could destroy the $2B backlog and embarrass ARM in front of its most important customers.
12. Fund Holdings

Report Generated: 7 July 2026

⚠️ Institutional holdings data below is sourced from SEC 13-F filings and public disclosures as of the most recent available filing date (typically Q1 2026 for US-listed institutional investors). Holdings may have changed materially since these filings. ARM is a Foreign Private Issuer; some non-US institutions are not required to file 13-F reports. The data below represents an approximation of major known institutional holders and should not be relied upon as a current, complete, or precise record of ownership.

Top Institutional Holders (13-F approximate, as of latest available)

SoftBank Group Corp.
~78%Controlling
Vanguard Group
~2.1%Index
BlackRock Inc.
~1.8%Index
State Street Global Advisors
~1.1%Index
Fidelity Investments
~0.9%Active
Capital Research (American Funds)
~0.7%Active
Norges Bank (Norway Gov. Pension)
~0.6%Passive
T. Rowe Price
~0.5%Active
Invesco Ltd.
~0.4%Active
Morgan Stanley Investment Mgmt.
~0.4%Active

Public float is approximately 20-25%. Large-cap index funds (Vanguard, BlackRock, SSGA) hold ARM as a NASDAQ component. Active managers hold relatively small stakes given SoftBank's dominant ownership. Insider selling by ARM executives has been minimal since IPO. Note: holdings shown are estimates based on available 13-F data and may not reflect current positions.

13. Valuations
Bull Case (12-Month)
$200
AGI CPU ramp beats expectations
FY2027E EPS: $2.40
P/E: 83x
$15B revenue pathway confirmed
Base Case (12-Month)
$134
Steady 22-25% revenue growth
FY2027E EPS: $2.00
P/E: 67x
Current price level
Bear Case (12-Month)
$75
AGI CPU delays + Arm China risk
FY2027E EPS: $1.60
P/E: 47x
RISC-V acceleration
Valuation MetricTTM (FY2026)NTM (FY2027E)Notes
P/E — GAAP157.6xn.a.$134 / $0.85 GAAP EPS
P/E — Non-GAAP75.7x67.0x$134 / $1.77; NTM: $134 / $2.00E
EV / Revenue28.3x23.2xEV ~$139B; NTM revenue $6.0B
P / Sales29.0x~23.8xMkt cap $142.6B / revenue
EV / Non-GAAP EBITDA58.8x~48xEBITDA ~$2,364M TTM
P / FCF (Non-GAAP)161.7xn.a.$142.6B / $882M FCF
52-Week Range~$85 – $175 (approx.)From 20-F annual report price data
CompanyNTM P/E (Non-GAAP)EV/Revenue (NTM)Gross MarginRevenue Growth
ARM Holdings67x23x97.5%+22%E
QUALCOMM14x3.5x57.0%+8%E
Inteln.a. (loss)2.0x42.5%-2%E
NVIDIA (data center AI peer)~35x~18x75.0%+55%E

ARM commands a significant premium to all semiconductor peers. The premium reflects: (1) near-100% gross margin vs industry 40-75%; (2) zero capital intensity; (3) royalty model creates compounding revenue without reinvestment; (4) AI data center optionality from AGI CPU. Source: calculated from SEC filings and public market data. Report date: 7 July 2026.

14. Investment Suggestion
Claude's Assessment — 7 July 2026

ARM Holdings: Exceptional Business, Exceptional Price — Staged Entry Preferred

ARM Holdings is, without question, one of the most structurally advantaged businesses in the global technology sector. Its near-monopoly on mobile and embedded semiconductor architecture, ultra-high gross margins (~97.5%), zero debt balance sheet, and growing data center footprint make it a rare compounding machine. The shift to subscription licensing (ACV up 21.5% to $1.66B) adds revenue visibility rarely seen in semiconductors.

  • The Arm AGI CPU is the key swing factor. The $2B+ in committed demand from Meta and others for FY2027-28 is real and significant. If ARM executes its first proprietary silicon product, it opens an entirely new revenue vertical that could add $5-10B in annual revenue by FY2030 — at product margins likely higher than pure licensing. This changes the investment calculus dramatically.
  • The valuation leaves no room for error. At 75x non-GAAP P/E and 28x EV/Sales, every growth scenario is priced in. A single quarter of royalty softness (smartphone inventory correction), AGI CPU delay, or Arm China disruption could compress the multiple by 30-40%. The risk/reward is asymmetric — upside is modest from current levels; downside is significant.
  • Arm China is a structural overhang. The ~18% revenue dependence on an entity ARM does not control, in a geopolitically volatile region, is a persistent risk that will not go away. Any US-China trade escalation could trigger immediate and severe revenue disruption with very little warning.
  • SoftBank's overhang matters. With ~78% ownership, SoftBank controls ARM's destiny. SoftBank has historically been willing to monetize assets (it sold ARM to Vision Fund, then took it public). A secondary offering or strategic transaction initiated by SoftBank could weigh on ARM's share price regardless of operating performance.
  • Suggestion: Accumulate on weakness, not at current levels. ARM is a must-own for long-term technology investors, but the current ~$134 price implies perfection. A target entry zone of $90-$105 (representing ~35-40% NTM EV/Revenue) would offer more appropriate compensation for execution risk. Any pullback caused by a royalty cycle softness or macro risk (rate concerns) would create a superior entry point. Position size should reflect the binary AGI CPU risk — size accordingly (not a full position until AGI CPU execution is de-risked in 1-2 quarters of shipments).