Arm CEO signals improving supply outlook for first in-house data centre chip
Rene Haas tells CNBC that confidence in meeting demand for the AGI CPU has grown further, as the company navigates a shift from licensing to selling complete silicon.
Arm Holdings chief executive Rene Haas has expressed growing confidence that the company can meet Wall Street’s expectations for demand for its new AGI CPU, marking a positive shift in the narrative surrounding the chipmaker’s first in-house data centre product. Speaking on CNBC’s “Mad Money”, Haas stated that the company’s ability to secure the necessary manufacturing capacity to convert demand into revenue has improved significantly since the previous earnings call.
The core challenge for Arm has not been a lack of interest, but rather the physical constraints of the global semiconductor supply chain. Unlike its traditional business model, which relies on licensing chip designs to other manufacturers, the AGI CPU represents a strategic pivot where Arm is selling a complete chip directly. This transition has placed the company in direct competition with other chipmakers for limited production lines, making supply capacity the critical variable for investors.
Arm’s visibility into demand has expanded steadily over the past six months. In March, the company announced an initial figure of $1 billion in demand. By May, that estimate had doubled to $2 billion, although the stock fell 10% following the update because management maintained its official $1 billion outlook while it resolved supply-side issues. By July, management indicated that confidence in securing supply had increased, prompting a 7% jump in the share price the following session.
Haas’s latest comments suggest this trajectory of improvement is continuing. He noted that the company’s confidence in hitting the $2 billion demand figure has grown even further since July. This escalation in confidence—from initial visibility in May to increased certainty in July and now to a stronger stance in September—indicates that the supply picture is steadily clearing, although hard numbers on AGI CPU shipments have yet to be reported.
The underlying financial performance of Arm remains robust, providing a solid foundation for this new venture. In its most recent quarter, total revenue reached $1.29 billion, a 22% increase year-on-year. Royalty revenue climbed 22% to $715 million, driven by data centre royalties that more than doubled as adoption of Arm’s Neoverse designs accelerated. Licensing revenue also hit a first-quarter record, growing 23% to $574 million, while free cash flow stood at $665 million.
Despite these strong fundamentals and the improving supply outlook, Arm Holdings stock remains roughly 45% below its June high of $452. The share price currently sits at $244, with analysts maintaining a price target of $289. Jim Cramer’s Charitable Trust has exited its position to lock in gains from the earlier run-up, though the company remains on the Trust’s watchlist. Investors appear to be adopting a cautious approach, waiting for Arm to demonstrate its ability to convert its growing demand pipeline into delivered chips and booked revenue before re-rating the stock to previous highs.
