SAN FRANCISCO, March 24, 2026, 10:50 (PDT)
Arm Holdings rose on Tuesday after the British chip designer unveiled the AGI CPU, its first in-house data-center processor for artificial intelligence. Shares were up 1.3% at $138.69 in late-morning U.S. trade. 1
The announcement matters because it pushes Arm beyond its long-running model of licensing chip blueprints and collecting royalties, and into selling production silicon. It also sharpens the valuation fight around the stock just days after HSBC said investors were undervaluing Arm’s opening in AI server central processing units, or CPUs, the general-purpose chips that manage work across data centers. 1
HSBC analyst Frank Lee called that shift “game-changing” and upgraded the stock to buy from reduce, lifting his target to $205 from $90. Barron’s said the call was the highest on Wall Street and that HSBC sees server CPU royalties growing 76% a year through 2031, to about $4 billion. 2
Chief Executive Rene Haas called Tuesday’s launch “a very pivotal moment for the company” in an interview with Reuters. Arm said Meta co-developed the chip, TSMC will manufacture it on a 3-nanometer process and volume production is planned for the second half of 2026. 1
Meta said the new CPU should “significantly improve” data-center density as it builds more AI infrastructure. Arm also said OpenAI, Cloudflare, SAP and SK Telecom are among customers, and OpenAI executive Sachin Katti said the chip would help the orchestration layer that coordinates AI systems at scale. 3
The product targets so-called agentic AI, software that can plan and act with limited human oversight rather than just answer prompts. That trend has revived interest in CPUs from established server players such as Intel and AMD, which handle scheduling, memory and data movement around AI accelerators. 1
Shares had already gained about 25% this year before Tuesday’s move. Arm has argued that its power-efficient designs, long dominant in smartphones, can win a larger role in AI servers as computing demand rises. 1
Not everyone buys the rally. A Simply Wall St article published Tuesday said a contributor model put Arm’s fair value at $39.16 a share, far below the market price, while Barron’s noted BofA remains neutral with a $140 target because of a softer smartphone backdrop. 4
The risk list is longer than valuation. Arm said in February that work on a complete chip had already lifted operating expenses, and analysts have warned that selling its own processors could put it into more direct competition with customers such as Qualcomm and Nvidia that still license its technology. 5
Malaysia remains another overhang. The country’s anti-graft agency said on March 4 that it was investigating corruption and fraud allegations tied to a 1.1 billion ringgit ($279 million) deal under which Malaysia agreed to pay Arm over 10 years for chip design plans and related knowhow. 6
LSEG estimates show Arm is expected to post $4.91 billion in revenue and $1.75 a share in net profit this fiscal year. If the AGI CPU wins broad deployment, the next debate may be less about whether Arm deserves an AI premium and more about how much of the data-center stack it can capture. 1
