Amazon's Graviton Chip Demand Soars
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 25 2026
0mins
Should l Buy ARM?
Source: NASDAQ.COM
- Custom Chip Growth: Amazon's Graviton and Trainium chips have surpassed a run rate of $10 billion in annual revenue, doubling year-over-year, indicating strong growth potential in the cloud computing market, with a possible standalone valuation of $100 billion.
- Data Center Revenue Doubling: Arm reported that its data center royalty revenue doubled in the last quarter, with expectations to surpass smartphone revenue in the next three years, highlighting the sustained growth driven by AI compute demand.
- Significant Performance Advantage: Amazon CEO Andy Jassy noted that Graviton instances outperform comparable x86 processors by over 40%, which is likely to drive increased spending on Arm CPUs in the cloud, enhancing its competitive position.
- Future Growth Potential: Arm management indicated that the growth of AI agents will drive more CPU usage for Graviton, especially with the upcoming Graviton 5 version, leading to higher royalty revenues and market share.
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Analyst Views on ARM
Wall Street analysts forecast ARM stock price to rise
24 Analyst Rating
19 Buy
4 Hold
1 Sell
Strong Buy
Current: 121.720
Low
120.00
Averages
160.58
High
201.00
Current: 121.720
Low
120.00
Averages
160.58
High
201.00
About ARM
Arm Holdings plc is engaged in operating a global computing platform. It architects, develops, and licenses high-performance and energy-efficient Arm compute platforms. The Company’s principal operations and activities are the licensing, marketing, research and development of central processing unit (CPU) design intellectual property (IP), graphics processors, system IP, market optimized platform IP, and associated software, tools and other related services. Its complementary products include GPU and NPU accelerators, interconnect, and others. Its primary product offerings are CPU products that address diverse performance, power, and cost requirements. It offers a family of GPU and NPU products providing efficient computing acceleration and an optimal visual experience across a wide range of devices. Its CPU, GPU, and System IP products integrated into a foundational compute platform optimized for a specific end market.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Performance Beat: Arm's Q3 revenue surged 26% to $1.24 billion, surpassing analysts' expectations of $1.23 billion, indicating strong market performance and boosting investor confidence.
- Data Center Revenue Doubling: The company's data center royalty revenue doubled year-over-year, with management projecting it to become the largest business segment in a few years, highlighting Arm's critical role in AI data center development and potential for sustained revenue growth.
- Optimistic Outlook: Management provided a Q4 revenue guidance of $1.47 billion, nearly 19% higher than the previous year, reflecting strong growth potential amid rising AI technology demands, attracting more investor interest.
- Competitive Market Advantage: As tech giants intensify their AI competition, Arm is expected to benefit directly from investments in data center infrastructure due to its leading position in chip design, further driving sales and earnings growth.
See More
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- Service Sector Expansion: The US services index unexpectedly rose to 56.1, marking the fastest expansion in 3.5 years, while service price pressures fell to an 11-month low, demonstrating economic resilience that could further drive stock market gains.
- International Situation Impact: Reports of Iran making indirect contact with the US to negotiate an end to the war boosted market sentiment, although Iranian media denied the claims, the hope for an early resolution to the conflict remains.
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- Significant Revenue Growth: Arm Holdings reported a 26% year-over-year revenue increase to $1.24 billion in Q3, surpassing analyst expectations of $1.23 billion, which boosts investor confidence in the company's market performance.
- Improved Profitability: The adjusted earnings per share reached $0.43, exceeding the market forecast of $0.41, indicating effective management in cost control and profitability, thereby solidifying its market position.
- Massive AI Business Potential: Arm's AI data center royalty revenue doubled year-over-year, with the CEO stating that the data center business is expected to surpass mobile in a few years, highlighting the company's strategic shift and growth potential in the AI sector.
- Optimistic Market Outlook: Management provided a Q4 revenue guidance of $1.47 billion, nearly 19% higher than the same quarter last year, suggesting that Arm is well-positioned to benefit from the intensifying AI competition, driving future sales and earnings growth.
See More
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- Employment Data Impact: The February ADP employment report indicated an increase of 63,000 jobs, surpassing expectations of 50,000, suggesting a resilient labor market that may support the stock market, while also raising concerns about Federal Reserve policy direction.
- Oil Price Fluctuations: Crude oil prices fell by over 1% after Iran proposed discussions with the US to end the conflict, compounded by Treasury Secretary's comments on potential 15% tariffs on imports, adding to market uncertainty.
- Economic Outlook: This week, the market will focus on US-Iran war news, corporate earnings, and economic data, with expectations for a slight decline in the February ISM services index and an increase of 3,000 in initial unemployment claims to 215,000, highlighting the complexities of economic recovery.
See More
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- Market Rebound: Semiconductor stocks rebounded on Wednesday after several days of steep losses, as investors reassessed geopolitical risks and tech-sector volatility, indicating a subtle shift in market sentiment.
- Earnings Report Impact: Despite Nvidia reporting strong earnings, investor focus remained on AI profitability, heavy capital spending, and macroeconomic pressures, reflecting ongoing caution about future uncertainties in the sector.
- Investor Advice: CNBC's Jim Cramer advised investors to remain calm amid sharp market swings and avoid panic selling, emphasizing that there are no fundamental issues in the memory sector and urging patience for potential market rebounds.
- Billionaire Buy-In: Billionaire Leo KoGuan purchased 1 million shares of Nvidia on Tuesday, signaling strong confidence in the future of artificial intelligence, and plans to buy more, demonstrating support for the market and optimism about the AI industry.
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Malaysia's Anti-Corruption Agency Investigates Arm Deal
- Investigation Launched: Malaysia's anti-graft agency is investigating a 1.1 billion ringgit ($279 million) deal with Softbank-owned Arm Holdings, focusing on allegations of abuse of power and fraud, which could have significant implications for the government and business environment.
- Officials Summoned: So far, 12 individuals, including a former minister and officials from the economy ministry and Malaysia's investment agency, have been summoned to provide statements regarding the Arm deal, indicating an expanding scope of the investigation.
- Deal Background: The Malaysian government announced in March 2025 a $250 million agreement with Arm to fund chip design plans for local manufacturers over ten years, raising questions about the legality of the transaction amid the ongoing investigation.
- Market Impact: Arm Holdings has a market capitalization of $129.27 billion, and the outcome of this investigation could affect its market standing and Malaysia's international reputation, potentially impacting investor confidence and the overall business climate.
See More
Arm Exceeds Q3 Sales and Earnings Estimates
- Performance Beat: Arm's Q3 revenue surged 26% to $1.24 billion, surpassing analysts' expectations of $1.23 billion, indicating strong market performance and boosting investor confidence.
- Data Center Revenue Doubling: The company's data center royalty revenue doubled year-over-year, with management projecting it to become the largest business segment in a few years, highlighting Arm's critical role in AI data center development and potential for sustained revenue growth.
- Optimistic Outlook: Management provided a Q4 revenue guidance of $1.47 billion, nearly 19% higher than the previous year, reflecting strong growth potential amid rising AI technology demands, attracting more investor interest.
- Competitive Market Advantage: As tech giants intensify their AI competition, Arm is expected to benefit directly from investments in data center infrastructure due to its leading position in chip design, further driving sales and earnings growth.
See More
US Stocks Rise on Economic Strength Amid Iran War Concerns
- Strong Economic Data: The February ADP employment report revealed an addition of 63,000 jobs, surpassing expectations of 50,000, indicating continued growth in the labor market and bolstering investor confidence in economic recovery.
- Service Sector Expansion: The US services index unexpectedly rose to 56.1, marking the fastest expansion in 3.5 years, while service price pressures fell to an 11-month low, demonstrating economic resilience that could further drive stock market gains.
- International Situation Impact: Reports of Iran making indirect contact with the US to negotiate an end to the war boosted market sentiment, although Iranian media denied the claims, the hope for an early resolution to the conflict remains.
- Oil Price Volatility: Despite crude oil prices being affected by the Iranian drone attack and the closure of the Strait of Hormuz leading to production cuts in Iraq, the market estimates a risk premium of $18 per barrel, reflecting heightened concerns over energy supply.
See More
Arm Holdings Q3 Earnings Exceed Expectations
- Significant Revenue Growth: Arm Holdings reported a 26% year-over-year revenue increase to $1.24 billion in Q3, surpassing analyst expectations of $1.23 billion, which boosts investor confidence in the company's market performance.
- Improved Profitability: The adjusted earnings per share reached $0.43, exceeding the market forecast of $0.41, indicating effective management in cost control and profitability, thereby solidifying its market position.
- Massive AI Business Potential: Arm's AI data center royalty revenue doubled year-over-year, with the CEO stating that the data center business is expected to surpass mobile in a few years, highlighting the company's strategic shift and growth potential in the AI sector.
- Optimistic Market Outlook: Management provided a Q4 revenue guidance of $1.47 billion, nearly 19% higher than the same quarter last year, suggesting that Arm is well-positioned to benefit from the intensifying AI competition, driving future sales and earnings growth.
See More
US Stocks Fluctuate Slightly Amid Oil Price Pressures
- Market Movements: The S&P 500 Index rose by 0.03%, while the Dow Jones Industrial Average fell by 0.11%, and the Nasdaq 100 Index increased by 0.63%, reflecting a slight recovery in the market following reports of indirect contact between Iran and the US to negotiate an end to the conflict, despite ongoing global trade tensions.
- Employment Data Impact: The February ADP employment report indicated an increase of 63,000 jobs, surpassing expectations of 50,000, suggesting a resilient labor market that may support the stock market, while also raising concerns about Federal Reserve policy direction.
- Oil Price Fluctuations: Crude oil prices fell by over 1% after Iran proposed discussions with the US to end the conflict, compounded by Treasury Secretary's comments on potential 15% tariffs on imports, adding to market uncertainty.
- Economic Outlook: This week, the market will focus on US-Iran war news, corporate earnings, and economic data, with expectations for a slight decline in the February ISM services index and an increase of 3,000 in initial unemployment claims to 215,000, highlighting the complexities of economic recovery.
See More
Semiconductor Stocks Rebound as Investors Reassess Risks
- Market Rebound: Semiconductor stocks rebounded on Wednesday after several days of steep losses, as investors reassessed geopolitical risks and tech-sector volatility, indicating a subtle shift in market sentiment.
- Earnings Report Impact: Despite Nvidia reporting strong earnings, investor focus remained on AI profitability, heavy capital spending, and macroeconomic pressures, reflecting ongoing caution about future uncertainties in the sector.
- Investor Advice: CNBC's Jim Cramer advised investors to remain calm amid sharp market swings and avoid panic selling, emphasizing that there are no fundamental issues in the memory sector and urging patience for potential market rebounds.
- Billionaire Buy-In: Billionaire Leo KoGuan purchased 1 million shares of Nvidia on Tuesday, signaling strong confidence in the future of artificial intelligence, and plans to buy more, demonstrating support for the market and optimism about the AI industry.
See More
Malaysia's Anti-Corruption Agency Investigates Arm Deal
- Investigation Launched: Malaysia's anti-graft agency is investigating a 1.1 billion ringgit ($279 million) deal with Softbank-owned Arm Holdings, focusing on allegations of abuse of power and fraud, which could have significant implications for the government and business environment.
- Officials Summoned: So far, 12 individuals, including a former minister and officials from the economy ministry and Malaysia's investment agency, have been summoned to provide statements regarding the Arm deal, indicating an expanding scope of the investigation.
- Deal Background: The Malaysian government announced in March 2025 a $250 million agreement with Arm to fund chip design plans for local manufacturers over ten years, raising questions about the legality of the transaction amid the ongoing investigation.
- Market Impact: Arm Holdings has a market capitalization of $129.27 billion, and the outcome of this investigation could affect its market standing and Malaysia's international reputation, potentially impacting investor confidence and the overall business climate.
See More
