Arm Holdings (ARM) Beats Q2, Lifts Q3 Outlook on AI Momentum

6 November 2025

Revenue jumped 34% YoY to $1.14B in fiscal Q2 (quarter ended Sept. 30), beating estimates. Non‑GAAP EPS: $0.39 vs. ~$0.33 expected. ^[1]
Guidance raised: Q3 revenue ~$1.225B ± $50M, ahead of the ~$1.11B consensus; management cites accelerating AI demand. ^[2]
Mix keeps improving:Royalty revenue +21% to $620M; licensing +56% to $515M, as Armv9 and CSS (Compute Subsystems) adoption expands. ^[3]
Strategic context: Google’s Arm‑based Axion CPUs target ~60% better performance per unit of energy vs. comparable x86 designs, highlighting Arm’s data‑center traction. ^[4]
Street reaction (this morning): Multiple brokers raised targets (e.g., JPMorgan to $180; Mizuho to $190; TD Cowen to $190). ^[5]

Why Arm is rallying today

Arm delivered another “beat‑and‑raise” quarter as AI workloads continue to shift toward Arm’s power‑efficient compute. Revenue of $1.14B (+34% YoY) topped expectations, while non‑GAAP EPS of $0.39 cleared the Street. Management guided Q3 well above consensus, citing broad‑based strength across smartphones, automotive, IoT—and especially data centers, where hyperscalers are standardizing around Arm for performance‑per‑watt gains. ^[6]

Under the hood, royalties rose 21% to $620M—helped by higher‑value Armv9 designs and Arm’s Compute Subsystems (CSS)—and licensing surged 56% to $515M on the timing of several high‑value deals. Those metrics underscore Arm’s dual model (upfront IP licenses + per‑chip royalties) compounding as next‑gen cores proliferate. ^[7]

What management is saying

CEO Rene Haas emphasized that power is the bottleneck in AI compute—a dynamic that directly favors Arm’s efficiency‑first architecture in servers and edge devices. He also highlighted the growing contribution from CSS, a more complete chip blueprint that shortens customers’ time to market and boosts Arm’s value capture per design. ^[8]

Arm also said it is stepping up AI‑focused R&D while maintaining profitability—an effort aimed at deepening its role from smartphones to data centers and automotive. ^[9]

The AI flywheel: proof points

Google Cloud is migrating applications to Arm and designing on Axion (Arm‑based) CPUs, which Haas said deliver ~60% better performance per unit of energy than comparable x86 designs. That performance‑per‑watt edge is central to hyperscaler TCO and is a key tailwind in today’s outlook. ^[10]
Arm’s royalty rate uplift continues as customers adopt Armv9 and CSS, leading to higher royalties per chip alongside unit growth. ^[11]

Street reaction this morning

Early Thursday notes skew positive following the print and guidance:

JPMorgan: PT raised to $180, Overweight; cites stronger licensing and royalty trends and rising AI momentum. ^[12]
Mizuho: PT lifted to $190, Outperform, highlighting the $1.14B beat and a constructive guide. ^[13]
TD Cowen: PT increased to $190, Buy. ^[14]

(Note: Targets and ratings are from broker reports summarized by reputable market news outlets; see sources linked above.)

One more thing: SoftBank’s M&A musings re‑surface

In separate market chatter today, Bloomberg reported (via MarketWatch) that SoftBank—Arm’s majority owner—considered acquiring Marvell and potentially merging it with Arm. Talks reportedly stalled; none of the parties commented. While purely speculative for now, these headlines can add volatility around Arm on deal‑making narratives. ^[15]

By the numbers (Q2 FY26)

Revenue:$1.14B, +34% YoY (consensus ~ $1.06B) ^[16]
Non‑GAAP EPS:$0.39 (consensus ~ $0.33) ^[17]
Royalty revenue:$620M, +21% YoY; Licensing:$515M, +56% YoY ^[18]
Q3 outlook:~$1.225B revenue midpoint (±$50M); raised vs. Street ~ $1.11B ^[19]

For the full shareholder letter and call details, visit Arm’s newsroom and investor relations pages. ^[20]

What to watch next

Hyperscaler adoption: Track deployments of Arm‑based instances and first‑party CPUs (Google Axion, Microsoft Cobalt 100, etc.) and their workload migration pace. Efficiency wins drive share. ^[21]
Royalties per chip: Continued mix shift to Armv9 and CSS should lift royalty dollars even if units are choppy. Watch CSS design wins and time‑to‑volume. ^[22]
Analyst estimate revisions: After today’s target hikes, consensus revenue/EPS for FY26–27 will likely grind higher if AI demand holds. ^[23]
SoftBank moves: Any financing/M&A headlines involving Arm can be a swing factor for sentiment. ^[24]

Bottom line

Arm’s Q2 print and stronger‑than‑expected Q3 guide reinforce a simple narrative: as AI workloads scale, power efficiency is strategy, and Arm is monetizing that shift across licenses and royalties. With hyperscalers leaning into Arm‑based compute and mobile/auto demand recovering, the setup into the next quarter looks constructive—though headlines around SoftBank and broader AI chip cycles can keep volatility elevated. ^[25]

Disclosure: This article is for informational purposes only and is not investment advice. Always do your own research and consider consulting a qualified financial advisor.

Why Arm Holdings Is Winning Big in AI!

Watch this video on YouTube.

References

1. www.reuters.com, 2. www.reuters.com, 3. newsroom.arm.com, 4. www.reuters.com, 5. www.tipranks.com, 6. www.reuters.com, 7. newsroom.arm.com, 8. www.reuters.com, 9. www.marketwatch.com, 10. www.reuters.com, 11. newsroom.arm.com, 12. www.tipranks.com, 13. seekingalpha.com, 14. www.marketbeat.com, 15. www.marketwatch.com, 16. www.reuters.com, 17. www.reuters.com, 18. newsroom.arm.com, 19. www.reuters.com, 20. newsroom.arm.com, 21. www.reuters.com, 22. newsroom.arm.com, 23. www.tipranks.com, 24. www.marketwatch.com, 25. www.reuters.com

Tags:

Mateusz Kaczmarek Latest posts

A technology and finance expert writing for TS2.tech. He analyzes developments in satellites, telecommunications, and artificial intelligence, with a focus on their impact on global markets. Author of industry reports and market commentary, often cited in tech and business media. Passionate about innovation and the digital economy.

View all

Ex-Dividend Reminder: Sensient Technologies, RPC, and Teekay Tankers Trade Ex-Dividend on 11/10/25
November 6, 2025, 2:27 PM EST. Dividend Channel notes that on 11/10/25, Sensient Technologies (SXT), RPC, Inc. (RES), and Teekay Tankers (TNK) go ex-dividend. SXT will pay a quarterly $0.41 on 12/1/25, RES $0.04 on 12/10/25, and TNK $0.25 on 11/21/25. Based on recent prices (SXT around $96.09), the ex-dividend pull is roughly 0.43% for SXT, 0.74% for RES, and 0.41% for TNK. Estimated annual yields are about 1.71% (SXT), 2.96% (RES), and 1.64% (TNK). In Thursday's session, SXT rose about 5.3%, RES fell ~0.2%, and TNK gained ~2.5%. Dividends aren't guaranteed; review history to gauge sustainability of yields.
Cotton Slips to Weaker Trade on Thursday as Futures Fall 20 to 25 Points
November 6, 2025, 2:24 PM EST. Cotton prices traded weaker Thursday, with most futures down about 20-25 points as Wednesday's session was mixed. Nearby contracts closed 2-3 cents higher on Wednesday but gave back gains intraday. Crude oil futures were down about 96 cents to $59.60, while the U.S. dollar index slipped to around 100.01. The Seam online auction sold 729 bales at an average of 65.95 cents/lb. The Cotlook A Index rose 25 points to 77.10 cents. ICE certified stocks were steady at 13,749 bales as of November 4. These moves suggest mixed supply-demand signals amid a generally range-bound market.
Ex-Dividend Reminder: Terex (TEX), Navios Maritime Partners (NMM) and Astec Industries (ASTE)
November 6, 2025, 2:22 PM EST. Dividend Channel notes that on 11/10/25, Terex Corp. (TEX), Navios Maritime Partners LP (NMM) and Astec Industries (ASTE) go ex-dividend. TEX will pay a quarterly dividend of $0.17 on 12/19/25; NMM $0.05 on 11/14/25; ASTE $0.13 on 11/26/25. Based on recent prices, the ex-dividend effect implies rough opens of about -0.36% for TEX, -0.10% for NMM, and -0.29% for ASTE, all else equal. History suggests annualized yields of about 1.45% for TEX, 0.41% for NMM, and 1.15% for ASTE. In Thursday trading, TEX was flat, NMM up ~0.9%, ASTE down ~2.2%. Investors may review dividend patterns to gauge sustainability.
Matador Resources (MTDR) Goes Ex-Dividend Ahead of Quarterly Payout
November 6, 2025, 2:21 PM EST. Matador Resources Co (MTDR) is set to trade ex-dividend on 8/16/22, with a quarterly payout of $0.10 per share, payable 9/1/22. At about a $59.7 share price, the dividend yields roughly 0.17% for the ex-date and an annualized yield near 0.67%. While dividends can be variable, the prior history suggests the latest payout could be part of a steady, albeit modest, income stream. The stock has traded in a 52-week range of $24.76 to $67.78, with the last trade around $59.72. In recent session trading, MTDR was down modestly, about 1%. Investors might also weigh the broader energy sector dynamics and the likelihood of continued dividend support in the context of company fundamentals.
Ex-Dividend Reminder: OMF, GABC and WELL Set to Trade Ex-Dividend on 11/10/25
November 6, 2025, 2:18 PM EST. On 11/10/25, the ex-dividend date, OneMain Holdings (OMF), German American Bancorp (GABC) and Welltower (WELL) will trade without their upcoming quarterly payouts. OneMain will pay $1.05 on 11/14/25, German American Bancorp $0.29 on 11/20/25, and Welltower $0.74 on 11/20/25. Based on OMF's latest price of $60.86, the dividend equates to about 1.73%. GABC and WELL ex-dividend price moves are expected around -0.73% and -0.40% respectively, all else equal. The implied annual yields, if these payouts persist, are about 6.90% for OMF, 2.91% for GABC, and 1.59% for WELL. Also note the day's trading moves: OMF up ~0.6%, GABC up ~1.9%, WELL up ~1.1%.