Arm revenue increases 27% YoY to record $1.44 billion, with data center royalties doubling

Arm is riding the AI boom to another record quarter. The chip designer reported $1.44 billion in revenue for its second quarter of fiscal 2027. That represents a 27% year-over-year increase and its fifth consecutive quarter of revenue growth above 20%.

Arm’s AI business pushes quarterly revenue to a new record

In its official Q2 FYE27 earnings announcement, Arm revealed that licensing revenue reached $773 million, up 50% year over year. Royalty revenue also jumped to $670 million, with data center royalties doubling compared to the same period last year.

The company says growing demand for its compute platform helped deliver the results. Its partners shipped more than 10 billion Arm-based chips during the quarter, adding 1.5 billion shipments year over year.

That milestone highlights how deeply Arm technology has spread across the industry. The company says its platform now serves more than 30 million developers.

Arm’s AI goals are also expanding beyond licensing and royalties. Its new Arm AGI CPU business is attracting strong customer interest, with purchase orders extending through calendar 2027. Arm now expects up to $2 billion in AGI CPU revenue across fiscal 2027 and fiscal 2028. The first commercial deliveries remain on track for its fourth fiscal quarter.

Data centers and AI PCs are becoming bigger growth drivers

Speaking of AI infrastructure, Arm’s server market share among top hyperscalers has grown considerably. It increased from 15% in calendar 2024 to more than 50% in 2025.

The company expects that figure to exceed 60% by the end of 2026. Amazon, Google, Microsoft, and NVIDIA are among the companies expanding their Arm-based platforms. Arm is also gaining ground in personal computing. Its processors now account for approximately 20% of global PC shipments, with Google’s new Googlebook lineup adding another opportunity.

Meanwhile, physical AI royalty revenue increased 50% year over year. This growth reportedly reflects stronger adoption across advanced driver-assistance and in-vehicle infotainment systems.

Arm’s GAAP operating income reached $201 million, while non-GAAP operating income came in at $638 million. Overall, the results show how AI demand is spreading across multiple markets.