Every major AI chip story seems to lead back to Arm Holdings (ARM) as the industry's biggest players rely on the company's architecture to build their processors. As ARM gears up for its fiscal Q1 earnings on July 29, investors are eager to see if the company can continue to translate strong demand into sustained growth needed to justify its premium valuation.
Valued at $277.7 billion, Arm Holdings develops the processor technology that powers billions of chips globally, licenses that technology to semiconductor firms, and gets royalties on each chip shipped. The company earns money through licensing revenue and royalty revenue. While historically, Arm's business was dominated by smartphones, today its processors power PCs and laptops, cloud servers, AI data centers, automotive chips, smart TVs, IoT devices, and much more. Thanks to AI, the company now has new growth opportunities in Cloud AI, Edge AI, and Physical AI.
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