Arm Holdings designs CPU instruction set architectures and processor IP cores, which it licenses to semiconductor companies that incorporate them into their own chips. Rather than manufacturing or selling chips directly, Arm earns royalties on every chip shipped using its architecture. The Arm architecture dominates mobile computing and has expanded significantly into servers, PCs, and automotive applications.

The AI infrastructure buildout has accelerated Arm's penetration of the data center CPU market. Cloud operators building AI infrastructure have invested in custom Arm-based processors as alternatives to x86: AWS Graviton4, Microsoft Cobalt, and Nvidia Grace are all Arm-based, deployed at large scale alongside GPU accelerators. The appeal is energy efficiency—Arm-based server CPUs deliver competitive performance per watt compared to Intel and AMD x86 designs, a consideration that grows significant when running AI infrastructure at scale.

On-device AI has extended Arm's addressable market further. Every major smartphone AI feature—on-device language models, real-time image processing, voice recognition—runs on Arm-based chips with dedicated neural processing units. The same is true for AI PCs using Snapdragon and Apple Silicon. Arm-based data center CPU shipments more than doubled in 2025, driving royalty revenue growth across the company's most valuable market segments. In early 2026, Arm notably launched their own CPU product, the Arm AGI CPU.