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Arm Holdings Is Powering the Edge AI Boom—And Royalty Revenues Are Set to Explode!

Arm Ltd’s Q3 fiscal 2026 results epitomize a mixed but largely optimistic outlook underlying the company’s strategic position in a rapidly evolving market landscape influenced by AI and data center growth. Arm has recorded its fourth consecutive billion-dollar revenue quarter, achieving a new milestone with a 26% year-on-year increase to $1.24 billion. This uptick can be credited to a robust 27% rise in royalties, driven by burgeoning demand in AI and data center infrastructure, and a 25% growth in licensing revenue. Particularly notable is the data center segment, which has more than doubled its royalty revenue year-on-year, aligning with Arm’s projection that this business may outstrip its mobile segment in size over a few years. The company’s emphasis on AI-centric developments has shown promise, as it’s clearly positioned to capitalize on shifts in compute needs toward high-performance, energy-efficient solutions.