Arm in the AI stack

The business and what the filings show

Arm licenses processor designs and earns royalties on chips that use them, including the CPUs inside most custom cloud chips. It reported $4.9B of revenue for its fiscal year to 2026-03, +23%, at a 98% gross margin, figures it files annually on Form 20-F.

Its customers are concentrated: its top five accounted for about 57% of revenue in fiscal 2026, and its largest, Arm China, for about 16%. As hyperscalers design more of their own silicon, more of the world’s server CPUs carry Arm designs, which is why it sits in the chips layer despite its small revenue.

Arm’s economics are close to pure intellectual property, which explains the gross margin. Its AI exposure grows with the number of custom chips rather than with GPU sales, making it a different kind of bet on the build-out.

How AI shows up in the numbers

AI shows up at Arm through royalties on the chips that use its designs: custom cloud processors, the CPUs paired with accelerators, and AI-capable phones and PCs. Its exposure grows with the number and complexity of chips designed rather than with GPU sales.

For scale, Arm’s revenue over fiscal 2026 equals 1% of the $566B the five largest buyers spent on capital projects over their latest four quarters. Their capex rose +81% on the year before, while Arm’s revenue grew +23%: slower than the spending, so it is capturing a smaller share of each new capex dollar, or more of its business sits outside the build-out.

Arm is a foreign private issuer, so it files an annual report on Form 20-F rather than quarterly 10-Qs, and its interim results are furnished on Form 6-K without the same structured data. This page therefore uses fiscal-year figures, and the quarterly comparisons on other company pages don’t apply. The next 20-F updates the figures here.

How it talks about AI

As a foreign private issuer, Arm doesn’t furnish the 8-K earnings releases we read for US companies, so its annual report on Form 20-F is the place it describes AI on the record. Statements in a 20-F carry more weight than a press release or an earnings call: they are part of a filing the company signs and can be held to. The sentences below are quoted from its latest 20-F.

Read them for two things: how directly the company ties its growth to AI, and how much it is willing to quantify. A company that names AI as its main growth driver is making a claim its revenue mix can be checked against in the next filing; one that says AI’s effect is hard to measure is telling you its numbers won’t isolate it.

The figure to set these statements against is Arm’s own growth: revenue +23% in fiscal 2026 at a 98% gross margin. If AI is driving the business as described, the next 20-F should show it in the mix of revenue by product or customer, and in margins that hold up as volumes grow.

• On custom accelerators: “Further, several of our customers are creating their own bespoke accelerators for artificial intelligence ("AI") workloads that are intended to sit alongside the Arm core.” 20-F, May 26, 2026
• On measuring AI revenue: “Because our products may be used in multiple use cases and applications, it is difficult to estimate with any reasonable degree of precision the impact of accelerated computing and AI models on our reported revenue or forecasted demand.” 20-F, May 26, 2026
• On its focus: “We are currently focused on growing our business in key areas such as automotive, cloud and AI data centers, IoT, personal computers and robotics.” 20-F, May 26, 2026

The trend in the numbers

Over the 5 fiscal years shown, Arm’s highest revenue was $4.9B in 2026 and its highest gross margin 98% in 2026. The latest year set the revenue record.

Year by year, Arm’s revenue changed −1% in 2023, +21% in 2024, +24% in 2025, +23% in 2026. Growth slowed in the latest year.

Its gross margin moved from 95% in 2022 to 98% in 2026: it keeps more of each dollar than it did. It spent $545M on capital projects in its latest year, 11% of revenue, and generated $1.5B from operations.

Where it sits in the stack

Arm sits in the chips layer of the AI stack. It is paid by the AI clouds and servers and networking layers; its own spending flows to foundry & tools, memory.

Among the 7 companies in this layer on our map, it ranks number 7 by revenue. Its gross margin of 98% compares with 66% for the layer as a whole, a sign that it keeps more of each dollar than its neighbors. The full layer analysis is on the chips page.

Latest four quarters for 10-Q filers; latest fiscal year for 20-F filers. Companies under $100 million of revenue are left out.

Arm reports annually on Form 20-F, so it is compared with its layer on its latest fiscal year; the US-listed companies in its layer grew +52% over their latest four quarters combined.

What has to go right, and what could go wrong

What has to go right. More data-center CPUs and custom accelerators have to use Arm designs, with royalty rates rising as chips get more complex.

What could go wrong. Concentration in a few customers, including Arm China, and the risk of licensees moving to alternative architectures would limit how much of the build-out reaches Arm’s royalties.

These describe the conditions the business depends on, as the filings show them. They are not a view on the stock.

Through the lens of Investing in AI

Rob May’s book offers six mental models for telling AI moats from traps. The one most useful for Arm’s layer is “AI changes markets and corporate strategy”: When creation gets cheap, choke points move. Like the internet shifting newspaper profits to discovery, AI pushes moats toward coordination and control points. The winners sit at the new choke point, not the best AI story.

The question it asks of any company is: What becomes scarce in this value chain as AI makes the work abundant? Applied to Arm, the filings on this page are the place to start: the margin trend shows whether it holds scarce value or passes it through, the customer and financing disclosures show who it depends on, and the commitments show what it has promised before the revenue arrives.

Customers and concentration

US companies must disclose any customer that accounts for 10% or more of revenue, and foreign filers usually describe their largest customers. Concentration matters because a company’s growth is only as durable as the handful of buyers behind it, and in the AI stack those buyers are often the same few companies.

• “In particular, our top five customers (including Arm China and SoftBank Group) collectively accounted for approximately 57%, 56% and 54% of our total revenue for the fiscal years ended March 31, 2026, 2025 and 2024, respectively, and our largest customer individually, Arm China, accounted for approximately 16%, 17% and 21% of our total revenue, respectively, during those fiscal years.” 20-F, May 26, 2026

Commitments and backlog

• Backlog. Arm doesn’t report a comparable total of remaining performance obligations in its XBRL data.

What to watch

Arm’s next annual report on Form 20-F will cover the fiscal year after the one ending March 31, 2026; foreign private issuers must file it within four months of the fiscal year end, so expect it by around July 29, 2027. Interim results arrive earlier on Form 6-K, without the structured data this page is built from.

• Royalty revenue growth, which rises with the number and complexity of Arm-based chips shipped.
• Customer concentration, including Arm China, a source of both revenue and risk.
• Adoption of Arm-based CPUs in data centers, the part of its business most tied to AI.
• Its place in the next quarterly AI Stack Report, which updates every company on the map from the new filings.

Figures from Arm’s SEC filings, latest period ended March 31, 2026. Other companies: all company pages.