Arm posts record Q1 FY27 revenue of $1.29B; AGI CPU demand now $2B vs. $1B secured

Arm reported record first-quarter fiscal 2027 revenue of $1.29 billion, up 22% year over year, driven by record licensing and royalty revenue. Data center royalties more than doubled YoY. Non-GAAP EPS grew 29% to $0.45, above the high end of guidance. The company generated $665 million in free cash flow and grew annualized contract value 13% to $1.73 billion.

The Arm AGI CPU, launched in March 2026, is outpacing initial projections: customer demand now exceeds $2 billion across fiscal years 2027 and 2028, up from the initial $1 billion opportunity target. The company has secured manufacturing capacity for the first $1 billion and is working with supply chain partners to expand availability. Licensing revenue reached $574 million, up 23% YoY, and CEO Rene Haas stated on the earnings call that confidence in achieving upside to the $1 billion AGI CPU target has increased in the past 90 days.

For practitioners, Arm's shift from pure IP licensing to silicon (the AGI CPU) creates new gross-margin expansion—management expects high-30% to low-40% margins for the first generation, scaling toward 50% as more work moves in-house. Q2 guidance of $1.38B ± $50M revenue and 13% royalty growth signals that smartphone weakness (memory-driven price inflation hitting mid-tier handsets) is being offset by data center momentum; the company projects 20% CAGR in royalties through fiscal 2031.