Rising CPU Demand Positions Arm Holdings (ARM) for Gains

Sands Capital Global Growth Fund, an investment management company, identified Arm Holdings plc (NASDAQ:ARM) as a new holding in its second-quarter 2026 investor letter. Arm Holdings is a UK-based technology firm that designs and licenses central processing unit (CPU) designs and related technologies for semiconductor companies and original equipment manufacturers.

The company's CEO and technology strategy, Ellie Southern, stated that Arm's earnings growth in AI infrastructure businesses is the main driver of the fund's positive outlook. Arm's CPU royalties are projected to rise from approximately 10 percent of revenue in 2026 to over 30 percent by 2031, due to the growing adoption of agentic AI.

The company's energy-efficient architecture provides a competitive advantage in selling AI CPUs to cloud hyperscalers and helps maintain its dominance in smartphones, where Arm holds more than 90 percent of the market share. SoftBank's majority ownership of Arm could also enhance upside potential, as SoftBank aims to promote AI adoption across its investment portfolio using Arm-based chips.