ARM Stock Soars: Record Q2 Revenue & AI Expansion Fuel Bullish Momentum
Arm Holdings just flexed its silicon muscles—Q2 revenue smashed records while AI ambitions went into hyperdrive. Investors are piling in as the chip architect proves it's more than just a mobile play.
Behind the numbers: ARM's licensing revenue surged 28% YoY, with royalty payments up 11%. Now they're gunning for AI accelerators and data center dominance. Talk about a pivot.
Cynical trader's note: Another 'AI play' narrative propping up valuations—until the next earnings call reveals R&D costs eating those juicy margins.
TLDR
- Q2 revenue hit $1.14 billion, up 34% YoY, marking Arm’s strongest quarter to date.
- Royalty revenue rose 21% to $620 million; licensing revenue jumped 56% to $515 million.
- Strategic partnership with Meta aims to boost AI efficiency using Arm’s low-power compute designs.
- Non-GAAP EPS of $0.39 beat guidance midpoint by $0.06; Q3 revenue outlook remains strong.
- Stock rose 3.5% in after-hours trading as AI and data center momentum continue.
Arm Holdings plc (NASDAQ: ARM) traded at $160.19, down 0.34% at close, before climbing 5.5% pre-market following its strong Q2 2026 earnings report released on November 5, 2025.
Arm Holdings plc American Depositary Shares, ARM
The chip designer reported record revenue of $1.14 billion, up 34% year-on-year, surpassing estimates of $1.06 billion.
Royalty revenue reached $620 million, up 21% year-on-year, while licensing revenue climbed 56% to $515 million. The results mark Arm’s third consecutive billion-dollar quarter, underscoring its growing dominance in AI, data center, and smartphone markets.
CEO Rene Haas credited the surge to strong adoption of Arm’s energy-efficient compute architecture and increasing royalty rates per chip, particularly in high-performance and AI-driven environments.
$ARM: Arm Holdings Plc — #Earnings Results pic.twitter.com/KR26ZV9we7
— Esthaar Labs | Finance & Tech Insights (@EsthaarLabs) November 5, 2025
Strong AI and Data Center Momentum
Arm’s success was driven by rising demand for AI-enabled chips and energy-efficient computing platforms. The company announced a strategic partnership with Meta, focused on optimizing AI workloads through Arm-based architectures.
In the data center segment, Arm’s Neoverse royalties more than doubled year-on-year. Haas highlighted that “access to power has now become the bottleneck” in data centers — a trend that positions Arm’s low-power designs as key enablers of next-gen AI systems.
The company’s non-GAAP operating income ROSE 43% to $467 million, with margins improving to 41.1%, up from 38.6% a year earlier.
Balancing Growth and Costs
While revenues surged, operating expenses also rose 31% to $648 million, reflecting increased investment in research and development. Arm’s CFO Jason Child noted that higher revenue allows the company to accelerate innovation while maintaining profitability.
Despite this, adjusted EPS declined to $0.22 from $0.30 a year earlier, reflecting heavy R&D spending. For the upcoming quarter, Arm projects revenue of $1.225 billion and EPS of $0.41, both above consensus expectations.
Expanding Beyond Core Platforms
Haas emphasized Arm’s push into new technologies, including chiplets and complex SoCs (systems on chips), signaling a MOVE beyond its traditional IP licensing model. The company’s acquisition of DreamBig Semiconductor supports this expansion, though it may require integration efforts and additional resources.
Child reaffirmed that Arm will “continue investing aggressively in R&D to ensure that AI runs on Arm,” underscoring the firm’s long-term vision for AI leadership.
Performance Snapshot
Arm’s year-to-date return stands at 27.23%, outperforming the MSCI World Index’s 17.69%. Over three years, Arm’s total return has soared 185.54%, reflecting strong investor confidence in its AI-driven future.
As the semiconductor race intensifies, Arm’s consistent billion-dollar quarters and expanding AI strategy position it among the most influential players in global chip design.
