TLDR
- Arm Holdings stock jumped over 16% on Wednesday after launching its first in-house AI chip, the AGI CPU
- The chip is designed for AI data centers and agentic AI workloads
- Meta co-developed the chip; OpenAI, Cloudflare, and SAP are among the first customers
- Arm expects the chip to generate $15 billion in annual revenue by 2031, up from $4 billion total in fiscal 2025
- Analysts at Barclays and Evercore raised price targets to $200 and $227 respectively, both maintaining Buy ratings
Arm stock was trading around $157.07 at the time of reporting, up from the day’s low of $148.25, reaching a high of $166.69.
Arm Holdings plc American Depositary Shares, ARM
Arm Holdings (ARM) made a major move on Wednesday, jumping over 16% after announcing the launch of its first proprietary AI chip — the Arm AGI CPU.
The chip marks a clear shift in strategy for the Cambridge-based company. Arm has long made its money licensing chip designs to other manufacturers. Now it’s making its own silicon.
The AGI CPU is built for AI data centers and designed specifically to run agentic AI workloads. Arm says it will enter full production in the second half of 2026.
Meta Platforms helped co-develop the chip and will be a core customer. OpenAI, Cloudflare, and SAP are also among the first wave of customers. Arm plans to extend those partnerships to include Amazon, Microsoft, and Alphabet through their cloud platforms.
CEO Rene Haas described it as “the next phase of the Arm compute platform and a defining moment for our company.”
$15 Billion Revenue Target by 2031
Arm has set an ambitious target — $15 billion in annual revenue from the new chip by fiscal 2031. For context, the company posted total revenue of $4 billion in fiscal 2025.
That’s a lot of ground to cover. But with a customer list that includes some of the biggest names in tech, the math doesn’t look impossible.
Arm acknowledged the chip’s profit margins won’t match those of its licensing business. But the sheer scale of the potential revenue stream has investors paying attention.
The energy efficiency angle is also drawing praise. As power consumption in AI data centers becomes a growing problem for hyperscalers, Arm’s low-power design philosophy is looking like a well-timed bet.
Analysts Lift Price Targets
Wall Street reacted quickly. Barclays analyst Tom O’Malley raised his price target from $165 to $200 — a 21% increase — and kept his Buy rating. He said the chip “plays into Arm’s strength in energy efficiency” and expects further product and customer announcements to follow.
Evercore ISI analyst Mark Lipacis went further, lifting his target from $170 to $227, a 34% jump. He called Arm “a key beneficiary of agentic AI” and sees the chip as a path to that $15 billion revenue figure by 2031.
ARM currently holds a Strong Buy consensus rating based on 20 Buys, 4 Holds, and 1 Sell from 25 analysts over the past three months. The average price target sits at $170.86, implying around 9% upside from current levels.
Lipacis’s $227 target, if realized, would represent roughly 45% upside from the current price.
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