Arm is dominating the AI server game without making chips—by licensing its designs and raking in $53 billion this quarter, a massive leap from under $30 billion a year ago. With royalties hitting $2.5 billion last year and newer Armv9 chips doubling per-chip payouts, Arm’s data center revenue more than doubled in the last quarter alone. Now, Arm’s entering the chip-making arena with its own AGI CPU, backed by Meta and OpenAI, aiming for $15 billion in annual revenue by 2031. But this move puts them in direct competition with longtime licensees like Amazon and Microsoft. Already, $2 billion in orders are locked in, but manufacturing delays push production until late 2027. Analysts are split—some cut targets, others raise them—leading to a “moderate buy” consensus, as the market watches Arm’s balancing act between licensing profits and the lower-margin risks of building its own chips.
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