Arm Holdings announced its first in-house chip, the Arm AGI CPU, at an event in San Francisco on March 24, 2026, with Meta as its initial customer. The chip is optimized for AI inference and marks a significant shift for Arm, which has traditionally focused on licensing its instruction sets to other chipmakers. CEO Rene Haas revealed ambitious financial targets, projecting annual revenue of $25 billion and earnings per share of $9 by 2031, with the new chip expected to contribute roughly $15 billion to that total. This represents a more than sixfold increase from Arm's 2025 annual revenue of just over $4 billion [1].
The announcement triggered a 6% pop in Arm's stock during after-hours trading, although the stock closed about 1.5% lower on Tuesday following the chip announcement [1]. CFO Jason Child stated that Arm is selling the new chip at about a 50% gross profit, expanding the company's market to include customers uninterested in the traditional IP model and offering greater profit opportunities. Child emphasized that existing customers would not be forced to migrate to the new model [1].
Demand for CPUs is expected to surge, driven by agentic AI, with Haas predicting a fourfold increase in demand and suggesting that the actual demand may be even higher. The new chip is positioned as a competitively priced option for companies unable to develop their own processors, according to cloud AI head Mohamed Awad. Analyst Patrick Moorhead estimates the chip's price will be in the thousands of dollars, though Arm did not disclose the exact cost [1].
Arm's move into direct chip sales represents a major change for the company, which has been known as the 'Switzerland of chip firms.' The company has previously competed with x86 data center chips from Intel and AMD through its Neoverse platform, which was adopted by Amazon, Google, Microsoft, and others for their AI chips [1].
CONCLUSION
Arm Holdings' launch of its first in-house AI chip and ambitious revenue targets signal a transformative shift in its business model, expanding its market reach and profit potential. The positive after-hours stock reaction and strong forward-looking statements suggest investor optimism about Arm's growth prospects in the AI and data center markets.