A $2 Billion Reason to Buy Arm Holdings Stock Now

Arm Holdings (ARM) stock is getting fresh bullish support after the chip designer delivered better-than-expected fiscal first-quarter results, with analysts highlighting its solid revenue growth, earnings beat and accelerating demand for its new AGI CPU

Arm reported record Q1 revenue of $1.29 billion, up 22% year-over-year (YOY), while adjusted earnings came in at $0.45 per share versus Wall Street expectations of $0.40. 

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More importantly, CEO Rene Haas said customer demand for Arm's AGI CPU now exceeds $2 billion across fiscal 2027 and 2028. That is important because the AGI CPU represents a major expansion for Arm beyond its traditional licensing and royalty model. Analysts particularly praised the strength of Arm's data-center royalty growth and management's operations.

ARM Stock Has More Than Doubled in 2026

Arm shares have been on a wild ride this year as investors increasingly price in the company's opportunity in AI infrastructure. The stock has soared 123.6% year-to-date (YTD). The rally has largely been driven by the company's AI ambitions, particularly the Arm AGI CPU unveiled in March. Arm says the chip is its first production silicon product designed specifically for agentic AI workloads.

Yet, valuation remains one of the biggest risks for investors. ARM trades at a price-to-sales ratio of 48.82 times and a price-to-book ratio of 28.67 times, far above typical semiconductor-industry averages.

The bullish argument is that investors are not simply paying for today's licensing and royalty revenue. They are paying for Arm's potential to become a much bigger player in AI data centers through its CPU architecture and new merchant-silicon strategy.

Arm's long-term targets help explain the premium. The company has previously outlined a path toward $25 billion in annual revenue by fiscal 2031, including $15 billion from AGI CPU sales. 

The problem is that execution now matters enormously. At this valuation, investors have little tolerance for disappointing growth.

Strong Earnings Highlight Arm's AI Momentum

Arm's latest quarterly numbers provide plenty of ammunition for the bulls. Revenue rose 22% YOY to a record $1.29 billion, beating the $1.26 billion consensus estimate. Royalty revenue increased 22% to $715 million, while licensing and other revenue climbed 23% to $574 million. Adjusted EPS jumped 29% to $0.45.