Arm Holdings stock surged over 19% on Wednesday following the UK-based firm’s introduction of a new processor suite tailored for data centers and artificial intelligence.
In a landmark strategic shift, the company revealed on Tuesday that it will begin selling its own physical chips for the first time. The move is projected to generate approximately $15 billion in annual revenue within five years.
Facebook and Instagram owner Inc. has been named the primary customer for the new processor, dubbed the “AGI CPU,” Arm announced during a Tuesday event in San Francisco. The hardware will feature up to 136 cores — a significant measure of processing capability—and maintain a 300-watt power profile. Taiwan Semiconductor Manufacturing Co. (TSMC) has been contracted to produce the silicon.
As part of this transition, Arm outlined aggressive financial targets for the coming years. The company anticipates that revenue from this direct-to-market chip business will eventually surpass sales from its traditional operations, which center on licensing intellectual property. This expansion is expected to drive total annual sales to roughly $25 billion within five years, representing a fivefold increase from current levels.
While the core IP division is projected to continue its growth, reaching $10 billion by that period, the move into finished hardware allows Arm to capture more value from the high-stakes AI infrastructure market.
Stock Performance
The optimistic sales outlook pushed Arm’s shares, listed in the United States, up by as much as 19%, marking its strongest intraday performance since April 2025.
At 1:16 p.m. EDT, the stock was trading at $160.64, higher by $25.68, or 19.03%.
So far this year, Arm stock is up nearly 39%.
Under CEO Rene Haas, Arm has successfully pivoted from its smartphone-centric heritage to a dominant role in the data center sector.
Haas noted that the decision to manufacture the AGI CPU was driven by direct demand from customers seeking specialized hardware.
“The product that we’re building is not only compelling — but we actually have customers who are lined up to buy it,” Haas said in an interview.
Designed to operate alongside accelerators from companies like Corp., the AGI CPU offers superior power efficiency compared to traditional designs from Intel and AMD.
This efficiency allows data center operators to maximize compute density within fixed energy budgets, according to Haas.
Arm Holdings CFO Jason Child explained that while licensing offers higher margins, selling physical chips provides significantly more absolute profit dollars.
Meta intends to integrate these AGI CPUs alongside its existing hardware to optimize its vast infrastructure. “We worked alongside Arm to develop the Arm AGI CPU to deploy an efficient compute platform that significantly improves our data center performance density,” Santosh Janardhan, head of infrastructure at Meta, said in a statement.