Arm Holdings (ARM) Shifts Strategy to Sell Own Data Center Chips

Loomis Sayles, an investment management firm, outlined its Q2 2026 Global Growth Fund outlook in an investor letter. The fund, yielding a 6.43% return, trailed the MSCI ACWI Index's 14.93% performance. The fund's strategy centers on long-term private equity investments in high-quality businesses with sustainable competitive advantages, buying them at substantial discounts to intrinsic value.

At quarter-end, the fund had an overweight in communication services, consumer discretionary, and healthcare, while holding an underweight stance in information technology, financials, industrials, and consumer staples sectors. Arm Holdings plc (NASDAQ:ARM) was singled out by the fund as a key contributor. The UK-based technology company designs and licenses central processing unit technologies for semiconductor companies and original equipment manufacturers.

As of August 21, 2026, ARM's stock closed at $243.32 per share, down 8.64% over one month but up 76.60% in the past 52 weeks. The company boasts a market capitalization of $259.87 billion. In its investor letter, Loomis Sayles described Arm as the world's leading microprocessor intellectual property supplier, providing its IP technology to partners for designing and manufacturing semiconductor chips across various sectors, including mobile, cloud, automotive, and IoT.

Arm's clients comprise most leading semiconductor companies, paying licensing fees and ongoing royalties for chips utilizing its technology. While Arm's licensing fees may take up to five years to materialize, the resulting royalties can span decades. Loomis Sayles previously held Arm in its large cap and all cap growth portfolios from 2012 until its acquisition by SoftBank in 2016.

Post-acquisition, the company invested significantly in R&D, accelerating innovation, leading to the launch of Armv9 and the Neoverse microarchitecture, positioning Arm for competition in the data center business. Despite acknowledging Arm's potential, Loomis Sayles believes other AI stocks offer higher upside potential with lower downside risk.