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1 / 4Arm beats on data center demand, but royalties miss and the shares slip×

The beat

Arm reported fiscal second-quarter revenue of $1.44 billion after the close, up 27% and above the roughly $1.38 billion analysts expected. Licensing did the work at $773 million against a $625.1 million estimate.

The miss

Royalties came in at $670 million, below the $720.8 million estimate, even with data center royalties doubling. It guided to about $1.54 billion for the current quarter, about in line, and shares fell about 2% after hours.

The chip

The bigger number sits in its own chip. Arm says confidence has risen in up to $2 billion of revenue across fiscal 2027 and 2028 from the Arm AGI CPU, which it sells directly, with purchase orders running through calendar 2027 and first deliveries due in the quarter ending in March. It expects Arm-based servers to pass 60% at the top hyperscalers by the end of this year.

The catch

Selling silicon puts it in competition with the licensees paying those royalties.

Sources and the full story

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Arm beats on data center demand, but royalties miss and the shares slip

Arm reported fiscal second-quarter revenue of $1.44 billion after the close, up 27% and above the roughly $1.38 billion analysts expected. Licensing did the work at $773 million against a $625.1 million estimate. Royalties came in at $670 million, below the $720.8 million estimate, even with data center royalties doubling. It guided to about $1.54 billion for the current quarter, about in line, and shares fell about 2% after hours.

The bigger number sits in its own chip. Arm says confidence has risen in up to $2 billion of revenue across fiscal 2027 and 2028 from the Arm AGI CPU, which it sells directly, with purchase orders running through calendar 2027 and first deliveries due in the quarter ending in March. It expects Arm-based servers to pass 60% at the top hyperscalers by the end of this year. Selling silicon puts it in competition with the licensees paying those royalties. SourcesABC

Sources

• AArm delivers a record second quarter (Arm Newsroom)newsroom.arm.com
• BArm beats second-quarter revenue estimates (Reuters, refused our fetch; read via search summary)reuters.com
• CArm beats second-quarter revenue estimates (MarketScreener, search result)marketscreener.com

This story ran in the Afternoon Brief of November 4th 2026.