Quick overview

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Arm Holdings, which benefits from increased use of its chip technology as tech companies spend heavily on artificial intelligence compute, predicted first-quarter revenue above Wall Street expectations on Wednesday.

Arm shares reversed course and dropped 5.49 percent after executives informed analysts at a conference call that they had not yet secured supplies to meet the demand for a new chip, and after analysts questioned the costs of entering the chip manufacturing business.

According to data gathered by LSEG, the company anticipates quarterly revenue of $1.26 billion, which contrasts with analysts’ estimates of $1.25 billion. By licensing its technology to businesses like Nvidia and Apple and collecting royalties for each product created using its designs, Arm makes money.

CPUs are becoming more and more crucial in data centers because of the growing interest in AI agents—semi or fully autonomous AI bots that can carry out tasks on behalf of users.

Agents use CPU-powered tools and software when they act, which significantly raises the demand for CPUs. Similar to Intel, AMD offers its own range of CPUs, but unlike its competitor, it also provides powerful GPUs for AI model training and execution, which allows it to reach a wider range of consumers.

,AMD is getting ready to introduce Helios, its first rack-scale system, which will integrate the company’s GPUs and CPUs into a larger server rack akin to Nvidia’s Vera Rubin-powered NVL72 rack system. AMD’s gaming division made $720 million, while its client segment earned $2.9 billion, as opposed to $2.73 billion. Global PC shipments are predicted to decline by 11.3 percent in 2026, according to the International Data Corporation.