Arm Holdings (ARM) Aims to Capture 50% of Global Data Center CPU Market Share

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Mar 31, 2025

Arm Holdings (ARM, Financial) expects its share in the global data center CPU market to increase from 15% last year to 50% by the end of this year. This growth is fueled by the rising demand for artificial intelligence (AI) technologies. Arm's CPUs often serve as the host chips in AI systems, managing traffic for other AI chips. For example, NVIDIA (NVDA) utilizes Arm-based chips in its advanced AI systems.

Compared to competitors like Intel (INTC) and AMD, Arm's technology is known for its lower power consumption, making it increasingly popular among cloud computing companies. Mohamed Awad, Arm’s infrastructure chief, noted that data centers adopting AI technologies require substantial power, favoring Arm's energy-efficient chips.

Arm, 90% owned by Japan’s SoftBank, doesn’t manufacture chips but licenses its technology to companies like Apple (AAPL) and NVIDIA for designing processors. Arm's revenue stream relies on licensing fees and royalties from chip sales.

Over the last two decades, Arm struggled to penetrate the lucrative data center market due to the industry's reliance on x86 chips. However, major cloud players like Amazon (AMZN), Google (GOOGL), and Microsoft (MSFT) have begun adopting Arm-based chips, signaling a shift.

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I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.