Chip Designer Arm Stock Soars on New AI Processor Revenue Projections

Arm Holdings stock jumped nearly 12% in pre-market trading after the company announced plans for a new artificial intelligence chip. The semiconductor firm projects the processor could generate $15 billion annually within five years.

Shares of Arm Holdings surged almost 12% during pre-market trading Wednesday following the company’s announcement of a new artificial intelligence processor expected to bring in billions in yearly revenue.

This represents a significant strategic shift for the semiconductor company, which has historically focused on licensing its chip designs to major tech firms like Nvidia and Qualcomm, earning money through royalty payments tied to sales volume.

The company’s new AGI CPU differs from existing processors that primarily handle chatbot responses. Instead, this chip is designed to manage the computational demands of “agentic AI” – advanced systems capable of acting independently on users’ behalf with limited supervision.

Company CEO Rene Haas told Reuters in an interview that the data-center processor is projected to bring in approximately $15 billion in annual revenue within roughly five years.

Haas also indicated the company anticipates total revenue of $25 billion during that timeframe, along with yearly earnings reaching $9 per share.

Citigroup analysts praised the company’s bold approach, stating: “Arm has not taken a baby step, say the production of a die or a chiplet for its customers; it has jumped in with both feet, developing the highly performing and energy efficient Arm AGI CPU.”

The analysts added: “The industry move to inference and, in particular, agentic AI is showing the need for more CPUs.”

The growing demand for “agentic AI” technology has already boosted interest in comparable processors produced by manufacturers including Intel and Advanced Micro Devices.

Intel’s stock climbed 3.4% while AMD shares increased more than 1% following the news.

According to LSEG data, Arm currently trades at 63.08 times analysts’ forward earnings estimates, compared to AMD’s 26.64 multiple and Intel’s 71.27 ratio.