Arm Holdings stock faces royalty test after record fiscal quarter

Arm Holdings delivered a record fiscal second quarter on November 4, but the mix of growth is keeping investors focused on royalties. The company reported the results in its shareholder letter, covered by the Arm Newsroom.

Arm's stock traded at 173.60 euros on Lang & Schwarz at 13:23 CET on Wednesday, November 11, 2026.

Record revenue, uneven royalty momentum

Revenue reached 1.44 billion US dollars in the quarter ended September 30, 2026, an increase of 27 percent from the prior year. Arm said the result was its highest second-quarter revenue and marked the fifth consecutive quarter with growth above 20 percent.

Licensing and other revenue was 773 million US dollars, up 50 percent year over year. That performance drove much of the quarter's acceleration and remains important because licensing activity can precede future royalty growth as customers move designs into production.

Royalty revenue rose 8 percent to 670 million US dollars. Data-center royalties doubled year over year, showing the benefit of AI infrastructure and cloud-server deployments. The broader royalty picture was less uniform: smartphone-linked demand faced pressure from higher memory prices, while Arm said physical AI royalties grew 50 percent on wider adoption in advanced driver-assistance and in-vehicle infotainment systems.

AGI CPU expands the opportunity

Arm is also extending beyond its traditional intellectual-property model through the Arm AGI CPU. The company said confidence had increased in reaching up to 2 billion US dollars of revenue from the product across fiscal 2027 and fiscal 2028. Purchase orders from multiple customers extend through calendar 2027, while first commercial deliveries remain on track for the fourth quarter of fiscal 2027.

Oracle Cloud Infrastructure plans to offer Arm AGI CPU instances in 2027. Arm also expects its share of server deployments at major hyperscalers to exceed 60 percent by the end of calendar 2026, supported by ramps at AWS, Google, Microsoft and NVIDIA.

Guidance sets the next test

For the current fiscal third quarter, Arm expects revenue of 1.54 billion US dollars, with a range of plus or minus 50 million US dollars. Adjusted earnings are expected at 56 cents per share, with a range of plus or minus 4 cents. Dow Jones, published by Morningstar, said the revenue outlook was ahead of the 1.52 billion US dollar analyst forecast and the adjusted earnings outlook was above the 55-cent consensus.

For investors, the central question is whether strong licensing and AI-related data-center demand will translate into a broader and more durable royalty stream. The near-term smartphone slowdown creates a counterweight, making the next quarterly update important for judging the pace of that conversion.

Investors can follow the broader US market through Current market reports.

More news and analyses on Arm Holdings stock.