Arm stock pops 6% as CEO Haas issues $15 billion revenue expectation for new chip

Arm Holdings stock popped 6% in after-hours trading on Tuesday as CEO Rene Haas announced 2031 annual revenue expectations that were more than six times what it was in 2025.
Haas unveiled Arm's first in-house chip on Tuesday at an event in San Francisco, with Meta as the initial customer. CNBC got an exclusive first look at the chip earlier this month, visiting the lab Arm built for it in Austin, Texas.
Arm stock closed about 1.5% lower on Tuesday following the chip announcement.
Haas said Arm expects the new chip to generate roughly $15 billion in annual revenue by 2031, with total annual revenue of $25 billion and earnings per share of $9.
Central processing units are seeing a resurgence of demand as agentic AI changes compute needs. Haas predicted CPUs will see a fourfold increase in demand around agentic AI.
"We may be under-calling that number," Haas said Tuesday. "I think the demand is higher than we think it is."
It's a huge lift for the chip design firm that generated just over $4 billion in annual revenue in 2025.
The Arm AGI CPU is a data chip optimized for AI inference. It's a long-anticipated move that marks a major change for the so-called Switzerland of chip firms as it enters into fresh competition with its customers.
Arm CFO Jason Child said Arm is selling its new chip at about a 50% gross profit.
"It expands our market to include customers that were not interested in an IP model, gives our current customers choice, and for Arm it creates a much larger profit opportunity," Child said at the event Tuesday.
For 35 years, the UK-based company has licensed its instruction sets to fabless chipmakers and collected royalties on every processor made with its designs.
While best known as the leading architecture in almost every smartphone, Arm started competing with x86 data center chips from Intel and AMD in 2018 with the launch of its Neoverse platform.
Amazon took Neoverse mainstream in its first custom processor, Graviton. Now Google, Microsoft and many others also base their AI chips on Arm.
"We're not going to force any of our existing customers to migrate to this new model," Child said.
Arm didn't share the cost of the new chip, but cloud AI head Mohamed Awad told CNBC in an interview that it would be "competitively priced."
Chip analyst Patrick Moorhead estimates it will cost in the thousands of dollars.
Awad said the new chip will hopefully serve as an option for companies that can't afford to make their own in-house processors.
"Arm has typically been modeled purely on their licensing and royalty business and now they have given investors a new market opportunity and business to wrap their head around and model, so it isn't a surprise it will take some time for folks to wrap their head around the valuation and new revenue targets," Ben Bajarin of Creative Strategies told CNBC.
Watch: Inside Arm's $71 million chip lab where its making its first ever CPU