Arm said revenue for Q4 FY2026 reached $1.49 billion, up 20% year-over-year and above the midpoint of guidance, according to the transcript. Full-year revenue came to $4.92 billion, up 23%, which marked the third straight year Arm has grown revenue by more than 20%, the company said.

The profit picture was just as tidy. Non-GAAP EPS hit a quarterly record of $0.60, helped by higher revenue and operating expenses that landed $10 million below guidance, the transcript shows. Non-GAAP operating income was $731 million, on a margin of about 49%, the transcript shows.

Management also kept the next quarter pointing in the same direction. Arm guided Q1 FY2027 revenue to $1.26 billion, plus or minus $50 million, with non-GAAP EPS of $0.40, plus or minus $0.04, according to the transcript. That suggests roughly 20% growth again, which is enough to keep the market interested without pretending this is a one-quarter fireworks show.

Why Arm stock is rising beyond the earnings beat

The earnings release mattered, but the bigger reason Arm stock is rising is the mix shift inside royalty revenue. Royalty revenue grew 11% to $671 million in the quarter, with the strongest gains coming from Cloud AI, Edge AI, and Physical AI, and data center royalty revenue more than doubled year-over-year, the transcript says.

That matters because data center chips are a different business from smartphones. Mobile still matters to Arm, but the faster money is showing up where cloud providers are racing to build AI capacity, and Arm’s own materials say the company now sees roughly 50% share of CPU compute among top hyperscalers, while it holds close to 100% market share in DPUs and SmartNICs, Arm’s newsroom reported.

There is also more proof in the customer list than in the slogans, which is usually a healthier sign. Arm said Google announced its custom Arm-based Axion CPUs are now used for TPU8t and TPU8i, with up to 2x better performance-per-watt, while Microsoft’s Arm-based Cobalt CPUs are deployed across a substantial portion of Azure regions and AWS said its custom silicon business, including Arm-based Graviton, is now running at more than $20 billion annually and growing triple-digit year-over-year, the company said.

Arm also said more than 50 companies have backed the expansion of its compute platform into silicon, including AWS, Broadcom, Google Cloud, Marvell, Microsoft, Micron, NVIDIA, Oracle, Samsung, SK Hynix, and TSMC, Arm’s newsroom reported. Those are Arm’s own materials, so they should be read that way, but the direction is still clear: its server and AI footprint is no longer theoretical.

The other driver behind the stock move is Arm’s AGI CPU pipeline, which has grown far faster than the company expected only a few weeks ago. Arm said it now has line of sight to more than $2 billion in customer demand across fiscal 2027 and 2028, more than double what it had said at the March Arm Everywhere event, the newsroom reported.

There is a catch, and it is a familiar one. Arm is still holding its revenue target for the AGI CPU at $1 billion because its current supply chain, including wafers, packaging, memory, and test equipment, is sized for that level, not the larger demand figure, the transcript says. Management said it is working to secure more supply and will give investors updates as the year goes on, the transcript says.

That bottleneck explains a lot about the stock’s move. Investors are not just reacting to a strong quarter. They are also trying to price in a business that Arm says could scale much further once supply catches up.

The company’s first-generation production silicon product for the data center is supposed to deliver more than 2x the performance per rack versus x86 platforms, with potential AI data center capex reductions of up to $10 billion per gigawatt, the transcript says. Arm also said first-generation AGI CPU gross margin is projected at about 30% plus, and that the business is expected to operate profitably as silicon revenue grows, the transcript says.

Management is thinking even bigger over the long term. Arm reiterated a FY2031 target of $15 billion in AGI CPU revenue and $10 billion in IP revenue, or $25 billion total, which it says would translate to more than $9 in EPS, the transcript says. Those are forecasts, not contracts, but forecasts are what stocks trade on when the market is in a mood.

For now, the stock move makes sense without any need for heroics. Arm posted record revenue, record EPS, a near-49% operating margin, and a full year of 23% growth, the company said. That would usually be enough for a decent pop on its own.

What has kept this one going is the change in the story. Data center royalties are doubling, hyperscaler adoption is broadening, and the AGI CPU launch has moved from a product demo to a demand pipeline that is already bigger than the supply chain can support, the transcript says.

The next checkpoint is whether Arm can show that supply is catching up with demand. Until then, why Arm stock is up today has a simple answer: the quarter was strong, but the future looks stronger, and investors would rather pay attention before the next bottleneck clears than after.