On Wednesday, Arm Holdings Plc (NASDAQ:ARM) defended its position in the booming CPU market after analysts questioned how the chip designer plans to compete against rivals like Advanced Micro Devices, Inc. (NASDAQ:AMD), Intel Corp. (NASDAQ:INTC) and hyperscaler-backed custom chips.
ARM Says AI Demand Is Expanding CPU Market
During the company's fourth-quarter earnings call, BofA Securities analyst Vivek Arya asked ARM CEO Rene Haas where the company fits in an increasingly crowded AI CPU landscape, especially as AMD projects a total addressable market of as much as $120 billion while maintaining expectations for significant market share.
Haas brushed off concerns about market crowding, saying Arm was among the first companies to project a $100 billion AI CPU opportunity during its "Arm Everywhere" event earlier this year.
"Now it's sort of nice to see the rest of the market catching up and going higher than the number," Haas said.
He added that AI workloads are driving a sharp increase in CPU core counts as AI agents run multiple independent tasks simultaneously.
Haas said ARM has already unveiled AGI CPU features 136 cores and suggested future chips could eventually scale to 256 or even 512 cores.
"In a very, very high core-count design, what really matters is efficiency per core and that's where we're world-class," he said.
ARM Highlights Nvidia, Amazon And Google Partnerships
Haas also pointed to ARM's growing presence across AI infrastructure, citing partnerships and deployments with Nvidia Corp. (NASDAQ:NVDA), Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc.'s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google.
"The very largest and most prevalent accelerators by volume … all connect to ARM," Haas said, referring to Nvidia's Blackwell and Rubin platforms, Google's TPU systems and Amazon's Trainium chips.
"Increasingly, they are going to be 100% ARM," he stated.
The CEO also argued that many enterprises, including Meta Platforms Inc. (NASDAQ:META), SK Telecom and OpenAI, are unlikely to build custom Arm-based CPUs themselves because of engineering complexity and capital requirements.
"I'm actually confident that by the end of the decade, I believe the largest market share by CPU type will be Arm," he said.
Arm Beats Q4 Estimates, Guides For 20% Revenue Growth
Arm reported fourth-quarter earnings of 60 cents per share, topping Wall Street estimates of 58 cents. Revenue for the quarter came in at $1.49 billion, ahead of analyst expectations of $1.47 billion.
For the first quarter, the company forecast revenue of approximately $1.26 billion, plus or minus $50 million, implying roughly 20% year-over-year growth at the midpoint.
Price Action: Shares of Arm jumped 13.63% to close at $237.30 on Wednesday and fell 6.40% in after-hours trading to $222.12, according to Benzinga Pro.
According to Benzinga Edge Rankings, ARM ranks in the 94th percentile for Momentum, reflecting strong performance across short, medium and long-term time frames.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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