Arm is continuing to rake in billions as the need for CPUs in AI data centres increases demand for its architecture, but a slip in demand from the smartphone market was enough to see its shares take a hit.
The British chip company saw a 22% year-on-year increase in revenue for Q1 FY27, bringing in $1.29 billion, but CFO Jason Child said growth in its royalties business was slowing thanks to poor smartphone sales.
In an earnings call Wednesday, he said: “I think we said last quarter that we’re expecting somewhere around 20% year-over-year for the next few years in royalties, including this year. Right now, if I had to guess, that’s probably somewhere closer to the high teens right now.”
Despite the change in outlook, Arm’s overall earnings came in above expectations as it started to ship its first in-house processor, the Arm AGI CPU, and said it expected revenue from the chip to reach $15 billion by FY2031.
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