Arm: Data Center Royalties Double YoY, Riding Grace Blackwell, Vera Rubin Growth

AI’s need for high-performance, energy-efficient chips creates a long-term tailwind for Arm, as the company’s heterogenous CPU architectures are seeing rapid adoption in data center applications. The company’s license and royalty revenue model had centered around its v9 architecture, as it commanded double the royalty of v8 at ~5%, and is featured in “virtually all high-end data center chips” and a majority of smartphones. For example, Arm’s Neoverse V2 (based on v9) powers Nvidia’s Grace CPU on its Grace Hopper and Grace Blackwell platforms, along with Amazon’s Graviton4 CPUs, Google’s Axion CPUs, and more.

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