Is ARM a Buy? What to Consider in 2026
Short answer
The bull case for Arm Holdings (ARM) rests on Armv9 royalty uplift: Arm's newest architecture generation, Armv9, carries royalty rates roughly double those of the older Armv8 it replaces. Revenue (FY2026, ended March 2026) is ~$4.92 billion. If you believe that thesis holds, the real questions become position sizing and overlap, not timing. The main risk to that view: The clearest risk is valuation: Arm trades at a forward P/E near 190 and a trailing multiple in the hundreds, so the price already assumes years of rapid, uninterrupted growth, and any wobble in AI or smartphone demand can trigger sharp drops (the stock fell sharply in late 2025 on such fears). Whether ARM is a buy comes down to whether you believe the thesis. This is informational, not a recommendation, and Walnut is not an investment adviser.
Arm Holdings designs the CPU instruction-set architecture and processor blueprints that power most of the world's smartphones and a growing slice of laptops, cars, edge devices, and data-center servers. It does not manufacture chips. Instead it makes money two ways: upfront licensing fees when a company (such as Apple, Qualcomm, Nvidia, or a hyperscaler) takes an Arm design or architecture license, and ongoing royalties collected on every chip shipped that uses Arm technology, typically a small percentage of the chip's value. In fiscal 2026, royalties were ~$2.61 billion and licensing ~$2.31 billion, so the two halves are roughly balanced, with the higher-royalty Armv9 architecture (rates about double the prior Armv8) and AI demand driving both higher. Arm has a long history as a British semiconductor IP firm. It was acquired by Japan's SoftBank in 2016 for about $31.4 billion and taken private. A proposed ~$40 billion sale to Nvidia collapsed in 2022 amid regulatory opposition, after which SoftBank returned Arm to the public markets through a Nasdaq IPO in September 2023. SoftBank still owns roughly 86 to 90% of the shares, so the public float is small and SoftBank's intentions weigh heavily on the stock. Rene Haas serves as chief executive, and in 2026 he pushed Arm beyond pure IP into selling its own chips, launching an in-house data-center CPU (the AGI chip) co-developed with Meta as first customer.
What's the case for buying ARM?
Armv9 royalty uplift
Arm's newest architecture generation, Armv9, carries royalty rates roughly double those of the older Armv8 it replaces. As phone makers and chip designers migrate to Armv9 and to Arm's Compute Subsystems, Arm collects more per device even if unit volumes stay flat. This mix shift is a structural tailwind that has lifted royalty revenue without Arm needing to ship a single chip itself.
Data center and AI demand
AI infrastructure is becoming a major royalty source, with data-center royalties more than doubling year over year in fiscal 2026. Arm-based CPUs from hyperscalers and AI accelerator vendors are displacing some traditional x86 server chips, and management frames agentic AI as driving a large step-up in CPU cores per data center. This pushes Arm into a higher-value market than mobile.
Own-silicon ambitions
In 2026 Arm moved beyond licensing IP to selling complete chips, launching the AGI data-center CPU with up to 136 Neoverse cores on TSMC's 3nm process, with Meta as the first customer. Selling finished silicon can capture far more revenue per design than a royalty, though it also puts Arm in partial competition with its own customers. Management has outlined a multibillion-dollar chip-revenue target over the rest of the decade.
What are the risks to ARM?
The clearest risk is valuation: Arm trades at a forward P/E near 190 and a trailing multiple in the hundreds, so the price already assumes years of rapid, uninterrupted growth, and any wobble in AI or smartphone demand can trigger sharp drops (the stock fell sharply in late 2025 on such fears). SoftBank's roughly 86 to 90% ownership means a thin public float and a persistent overhang if SoftBank ever sells more shares. Royalty-free RISC-V is a long-term structural threat backed by large customers seeking to avoid Arm fees. And revenue is concentrated among a handful of large customers, while Arm's new chip business risks competing with the very licensees it depends on.
How is ARM valued? (as of June 2026)
- Revenue (FY2026, ended March 2026): ~$4.92 billion
- Royalty revenue: ~$2.61 billion (up ~21%)
- Licensing and other revenue: ~$2.31 billion (up ~25%)
- Revenue growth (year over year): ~23%
- Forward P/E (next-year estimates): ~190x (trailing P/E in the hundreds)
- Market capitalization: ~$320 to $390 billion (swung sharply with AI sentiment in 2026)
Arm trades at one of the richest valuations among large-cap chip names, with a forward P/E around 190 versus more typical ranges in the 20s to 40s for established semiconductor companies. The premium reflects high expectations for Armv9 royalty growth, data-center penetration, and the new in-house chip business. At these multiples the market prices in years of compounding growth, so the stock is unusually sensitive to any change in the AI demand narrative.
How do you decide if ARM is a buy?
Rather than asking whether ARM is a buy in the abstract, it tends to help to answer four questions:
- Thesis: do you believe the case above, and is it still true today?
- Time horizon: a single stock can be volatile, so a longer horizon absorbs more of the swings.
- Position sizing: a thesis can be right and the sizing still wrong; decide how much of your portfolio one name should be.
- Overlap: check whether you already hold ARM indirectly through an index or sector ETF before adding more.
For the full picture, see the ARM stock guide (what the company does, the ETFs that hold it, similar stocks, and the themes it fits). In Walnut you can ask its AI about ARM against your real portfolio and see your actual exposure before deciding.
The bottom line on ARM
The bottom line: Arm Holdings's story right now is Armv9 royalty uplift, with revenue (fy2026, ended march 2026) at ~$4.92 billion. If you believe that narrative continues, the call is about sizing ARM sensibly and checking overlap with what you own; if you doubt it (the risk: the clearest risk is valuation: Arm trades at a forward P/E near 190 and a trailing multiple in the hundreds, so the price already assumes years of rapid, uninterrupted growth, and any wobble in AI or smartphone demand can trigger sharp drops (the stock fell sharply in late 2025 on such fears).), it is not for you. Decide from the thesis, not the ticker. Walnut is not an investment adviser.
Build a basket around ARM with Walnut
Use Arm Holdings as one constituent in a thematic basket Walnut's AI helps you assemble. Describe a thesis you believe in, the AI proposes the holdings and weights, and you approve before any broker order.
FAQ
Is ARM a good stock to buy right now?
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The case for Arm Holdings right now is Armv9 royalty uplift, with revenue (fy2026, ended march 2026) at ~$4.92 billion. If you believe that thesis holds, ARM is a way to own it and the real questions are sizing and overlap, not timing; the main risk to that view is the clearest risk is valuation: Arm trades at a forward P/E near 190 and a trailing multiple in the hundreds, so the price already assumes years of rapid, uninterrupted growth, and any wobble in AI or smartphone demand can trigger sharp drops (the stock fell sharply in late 2025 on such fears). So it comes down to whether you believe the thesis. Walnut is not an investment adviser and this is not a recommendation.
What does Arm Holdings do?
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Arm Holdings designs the CPU instruction-set architecture and processor blueprints that power most of the world's smartphones and a growing slice of laptops, cars, edge devices, an
What are the main risks of ARM?
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The clearest risk is valuation: Arm trades at a forward P/E near 190 and a trailing multiple in the hundreds, so the price already assumes years of rapid, uninterrupted growth, and any wobble in AI or smartphone demand can trigger sharp drops (the stock fell sharply in late 2025 on such fears). SoftBank's roughly 86 to 90% ownership means a thin public float and a persistent overhang if SoftBank ever sells more shares. Royalty-free RISC-V is a long-term structural threat backed by large customers seeking to avoid Arm fees. And revenue is concentrated among a handful of large customers, while Arm's new chip business risks competing with the very licensees it depends on.
Is ARM a good stock to buy right now?
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It depends on your goals, time horizon, and risk tolerance, and this is not advice. The bull case is a high-margin royalty model with Armv9 rate uplift and booming AI and data-center demand. The bear case is an extreme valuation (forward P/E near 190) that prices in years of perfect execution, plus heavy SoftBank ownership. Weigh both against your own plan.
What does Arm Holdings do?
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Arm designs the CPU architecture and processor blueprints used in most smartphones and a growing share of laptops, cars, edge devices, and data-center servers. It does not make chips itself. Instead it licenses its designs to chipmakers and collects royalties on every Arm-based chip those companies ship, making it the underlying intellectual-property layer of modern computing.
Does ARM pay a dividend?
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Arm does not currently pay a dividend. Like many high-growth technology companies, it reinvests cash into research, engineering, and its expansion into data-center chips rather than returning capital to shareholders. Investors in Arm are relying entirely on potential share-price appreciation, not income, so it may not suit those seeking regular dividend cash flow.
How does Arm make money?
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Arm makes money two ways. First, upfront licensing fees when a company takes an Arm architecture or design license. Second, ongoing royalties, a small percentage of each chip's value, collected on every Arm-based chip shipped. In fiscal 2026 royalties were about $2.61 billion and licensing about $2.31 billion, with the newer Armv9 generation carrying roughly double the royalty rate of Armv8.
Walnut is informational and is not an investment adviser. This page is educational and not a recommendation to buy or sell ARM; figures are approximate and dated, and your own situation, time horizon, and risk tolerance should drive any decision. Verify current data before investing.