Arm Holdings stock weighs record Q2 against slower royalties

Arm Holdings reported a record fiscal second quarter on November 4, with revenue rising 27 percent year over year to 1.44 billion US dollars for the period ended September 30. The company said the result marked its fifth consecutive quarter of revenue growth above 20 percent. The figures and outlook were published in the Arm newsroom.

Licensing leads the quarterly advance

Licensing and other revenue increased 50 percent to 773 million US dollars. Arm presented the licensing momentum as an early indicator of future royalty growth as customers move more designs into production. Royalty revenue reached 670 million US dollars, up 8 percent year over year, with data-center royalties doubling.

The mix was less favorable in edge markets. Arm said memory-cost pressure affected smartphones, while management expects strength in cloud AI and physical AI to offset part of the weakness. Physical AI royalty revenue increased 50 percent year over year as advanced driver-assistance and in-vehicle infotainment systems expanded into more vehicles.

AGI CPU orders raise the stakes

Arm is also moving beyond its traditional licensing model with the Arm AGI CPU. Purchase orders from multiple customers extend through calendar 2027, and first commercial deliveries remain on track for fiscal fourth quarter 2027. The company increased its confidence in achieving up to 2 billion US dollars of AGI CPU revenue across fiscal 2027 and 2028, supported by additional supply agreements and customer commitments.

Oracle Cloud Infrastructure plans to offer Arm AGI CPU instances in 2027. Arm also cited independent testing that showed approximately twice the performance per rack of the AMD EPYC 9755. The opportunity brings higher potential revenue per customer, but it also adds manufacturing, supply-chain and execution requirements to a business historically centered on intellectual property.

Next quarter keeps royalty pressure visible

For fiscal third quarter 2027, Arm expects revenue of 1.54 billion US dollars, plus or minus 50 million, implying year-over-year growth of approximately 24 percent at the midpoint. Management expects licensing and other revenue to increase by slightly more than 50 percent, while royalty revenue is expected to grow at a low-single-digit rate year over year because of weaker edge AI demand and a difficult comparison.

The real-time quote of Arm Holdings stock was 154.80 euros on Lang & Schwarz at 13:12 Berlin time on Monday, November 9, 2026. The latest figures leave investors weighing the near-term royalty slowdown against the potential contribution from data-center expansion and AGI CPU deliveries.

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Further developments will depend on the fiscal third-quarter report, the pace of AGI CPU shipments and whether data-center royalty growth can offset pressure in smartphones. More news and analyses on Arm Holdings stock.