Arm’s $2 billion in AGI CPU sales are still not enough to penetrate 5% of overall market share, analyst reveals — at least $90 million worth of CPUs to be shipp

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Arm's $2 billion in AGI CPU sales are still not enough to penetrate 5% of overall market share, analyst reveals — at least $90 million worth of CPUs to be shipp

Meta's multi-billion-dollar Graviton deal highlights intensifying CPU shortages in AI infrastructure

Given the rising interest in the new chip, the company expects to generate $15B in AGI CPU sales and $10B in IP revenue by FY 2031 (ending on March 31, 2031), which will drive its total revenue to $25B per year, up from $2.61B in FY 2026.

Generating $15 billion in data center CPU sales in a single year is a big deal; Intel earned $16.8B selling server processors last year, after all. Given the rising demand for CPUs, particularly for agentic AI workloads, Arm's revenue may indeed increase by almost a factor of 10, with actual CPUs accounting for 60% of that total figure.

While $100M worth of AGI CPUs in Q4 2026 and over $2B of demand for the next two fiscal years looks like a lot of money (especially given the fact that Arm's current annual revenue is $2.61B), Arm's presence in the server and data center CPU market (silicon CPUs, not IP) will be negligible (yet still quite hard to achieve) if compared to share of merchant CPUs.

AMD and Intel sold just under 20 million data center-oriented EPYC and Xeon SP processors worth tens of billions of dollars in 2025, according to Dean McCarron, president and principal analyst at Mercury Research , a leading CPU market research firm. If we consider only 2025 data center CPU shipments, Arm would need around 4% unit share of the current server CPU market to achieve its $2 billion revenue target.

"In round numbers for 2025, AMD's EPYC average selling price was about $1,325," Dean McCarron told Tom's Hardware Premium . "For Intel, the 2025 ASP for Xeon SP* is about $1,125. What Arm gets of course might be different, and prices are rising, but something like $1,250 probably is not a bad starting place."

At this point, it is hard to estimate the actual ASP of Arm's AGI since while the company advertises processors with up to 136 cores, we can only wonder how many SKUs there will be and how many cores entry-level models will have. If Arm behaves like a typical CPU maker — balancing recovery of development and manufacturing costs against maximizing margins — then AGI's ASP will be comparable to that of EPYC or Xeon.

"So, $2 billion would take roughly 1.6 million CPUs, if that is done over the course of a couple years — eight quarters — that is an average of 200,000 units per quarter," McCarron explained. "For comparison, in 2025, the combined EPYC and Xeon SP markets averaged just under 5 million units per quarter, and of course, that is going to be growing rapidly in 2026 and beyond. So, Arm's $2 billion in server CPU revenue requires them to sell just 4% of the total units right now, and this would be an even smaller percentage of the total in a couple years."

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Since Meta is a co-designer partner and lead customer for Arm's AGI CPU, it might get a considerably lower price, which means that Arm will have to supply more units to meet its revenue target, which will mean a higher market share at the cost of lower profits.

"While those [ASP] figures span entry-level to the largest cores, the volumes (and ASPs) are dominated by the hyperscalers," explained McCarron. "When you buy hundreds of thousands of units at a single time, there are some volume discounts, which is why the ASPs are in the low thousands and not $10,000+."

*Other Intel server products were excluded from the comparison as they are not direct competitors to Arm-based data center CPUs.

Given the widespread shortages of everything from wafers at TSMC to memory and from storage devices to advanced chip packaging capacity, we can only wonder whether Arm can increase its output of its AGI CPUs in the next two years by a factor of two. The company has not given a positive answer straight away, but it claims that it is working on it.

"How quickly can we get units?" Rene Haas asked rhetorically. "The number that we talked about end of March was supply in place to support $1 billion of demand, and that includes memory, that includes wafers, that includes packaging, that includes access to test equipment. For the $2 billion, we are now in the process of securing supply to support that. The teams are working around the clock to make sure we can find the right answers for our customers."

Strategically, Arm positions its AGI CPUs not as traditional off-the-shelf processors competing directly with merchant CPU vendors and/or custom silicon designed by (or for) leading hyperscale cloud service providers, but as scalable compute platforms and subsystems that hyperscalers and OEMs can use for specific workloads and vertically integrated AI stacks.

The first-gen Arm AGI processor was co-developed with Meta , which will be the first and lead customer for the CPU. Nonetheless, Cerebras, Cloudflare, F5, OpenAI, Positron, Rebellions, SAP, and SK Telecom plan to deploy the Arm AGI CPU for a variety of use cases that include agentic AI CPU workloads. These include accelerator management and control plane processing, as well as other CPU workloads that support AI agent infrastructure or typical cloud workloads.

While the AGI processors will not be available on demand like server CPUs from AMD and Intel, interested parties will be able to get AGI-based rack-scale solutions from such OEMs and ODMs as ASRock Rack, Lenovo, Quanta Computer (which is the leading supplier to Meta), and Supermicro.

On the hardware side, Arm claims that its AGI processor is the world's most efficient agentic CPU. In particular, Arm claims that its AGI CPU was purpose-built as a new class of processor for sustained parallel performance at rack scale, delivering high 'per-task performance' without throttling across thousands of cores and retaining modern data center power and cooling limits.

Arm's 1 st Generation AGI is a data center-bound processor that features up to 136 high-performance Neoverse V3 cores at up to 3.70 GHz, based on the Armv9.2 instruction set architecture, equipped with dual 128-bit SVE2 (Scalable Vector Extension 2) units per core, as well as 2MB of L2 cache per core.

The CPU features a 12-channel DDR5 memory subsystem supporting up to 6 TB of 8800 MT/s memory, providing up to 6 GB/s of bandwidth per core, and has an I/O that supports 96 PCIe Gen6 lanes with CXL 3.0 on top for caching and memory expansion. The CPU is comprised of two identical chiplets (with their own memory interfaces and I/O) made using a 3nm-class process technology and has a thermal design power of 300W.

Arm has a roadmap for its own AGI processors that spans years. While the company does not disclose it to the public, its management implies a consistent and significant core count increase, and believes that agentic AI workloads will call for racks full of CPUs rather than racks that pack a few CPUs and tens of AI accelerators . When it comes to agentic AI workloads, they will not call for more CPUs, but rather for more CPU cores; hence, the rapid core count increase seems to be a logical evolution for Arm's own AGI processors.

"The way I think they think about it is that while the ratios may not go to more CPUs than GPUs from a chip standpoint, they probably will from a core count standpoint," said Rene Haas, chief executive of Arm, during the recent earnings call. " CPUs today, the Arm AGI CPU, for example, has 136 CPU cores. [Nvidia's] Vera, that is 88. As I mentioned earlier, could I see those core counts doubling or quadrupling over the next number of years? Absolutely. […] Will you see many more CPUs inside a data hall, dedicated racks of CPUs that are doing agentic orchestration and scheduling and management? 100%."

With up to 136 highly high-performance cores optimized for agentic AI and data center workloads and available starting from Q4 2026, Arm's AGI CPU is poised to be in high demand from those who need high-end CPUs to run their AI agent infrastructure and whose software stack is already optimized for Arm.

Orders for Arm's 136-core AGI CPUs have doubled to over $2 billion since their announcement on March 24. The development is a result of the skyrocketing growth of demand for CPUs for agentic AI infrastructure and reflects similar occurrences at AMD and Intel. The company now expects to generate $15 billion in AGI CPU sales and $10 billion in IP revenue in fiscal 2031 (which ends on March 31, 2031), increasing its revenue by 9.5X in five years.

However, while $2 billion by FY2028 and $15 billion in FY2031 look like a huge amount of money, Arm will remain a strong contender, rather than a major supplier of data center CPUs, as AMD and Intel earn tens of billions per year selling their EPYC and Xeon parts and are projected to earn hundreds of billions in the 2030s.

Mercury Research believes that Arm could ship roughly 1.6 million of AGI CPUs over the next two fiscal years, which looks pale compared to nearly 20 million of EPYC and Xeon processors sold in 2025. Still, it should be noted that Arm does not plan to compete directly with merchant CPUs as its AGI processors will be available to select hyperscale CSPs and through OEMs and ODMs that will offer rack-scale solutions based on AGI CPUs.

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Anton Shilov is a contributing writer at Tom\u2019s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends. ","collapsible":{"enabled":true,"maxHeight":250,"readMoreText":"Read more","readLessText":"Read less"}}), "https://slice.vanilla.futurecdn.net/13-4-23/js/authorBio.js"); } else { console.error('%c FTE ','background: #9306F9; color: #ffffff','no lazy slice hydration function available'); } Anton Shilov Social Links Navigation Contributing Writer Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

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