- Arm Holdings (ARM) stock increased over 5% after reports of developing its own chip, with Meta Platforms (META) as one of the first customers, marking a shift from its traditional role as a neutral technology licensor.
- The new Arm chip is aimed at server central processing, entering into competition with its own customers, amid a backdrop where tech giants like Meta are spending billions on AI development, including $65 billion this year.
- Arm’s strategic move is supported by massive data center investments from Google ($75B), Microsoft ($80B), and Meta ($65B), and its involvement in the Stargate project, contributing to nearly a 32% rise in ARM’s stock value in 2025.
Arm Holdings (ARM) saw its stock price surge over 5% to $162.50 during Thursday’s trading session after reports surfaced about the company’s strategic pivot towards developing its own chip, with Meta (META) confirmed as one of its inaugural customers. This move marks a significant shift for Arm, which has traditionally been known for neutrality in the $700 billion semiconductor industry by licensing its instruction sets and core designs to a wide array of tech giants like Apple (AAPL), Google (GOOG, GOOGL), Nvidia (NVDA), Amazon (AMZN), Microsoft (MSFT), Qualcomm (QCOM), and Intel (INTC).
The new product from Arm, as per the Financial Times report, is geared towards being a central processor for servers, distinguishing it from the graphics processors commonly utilized in AI’s heaviest computational tasks. This development comes at a time when major tech companies are heavily investing in AI infrastructure. Meta, for instance, has allocated up to $65 billion this year for AI development, predominantly on Nvidia systems but also exploring alternatives like Advanced Micro Devices’ (AMD) chips and its own in-house developments.
This strategic move by Arm to produce its own silicon could potentially disrupt its relationship with some clients, given that it now competes directly with them. However, the company’s CEO, Rene Hass, sees this as a golden opportunity, especially with the significant data center spending announced by tech behemoths like Google ($75 billion), Microsoft ($80 billion), and Meta ($65 billion). Hass emphasized during a recent earnings call that “No one is pulling back,” indicating a robust demand for advanced technology solutions in the AI sector.
Arm’s decision to venture into manufacturing its own chip comes after a high-profile, yet ultimately unsuccessful acquisition attempt by Nvidia in 2020, which was blocked due to Arm’s pivotal role in maintaining balance in the chip market. Since going public in 2023, Arm has grown its market cap to over $163 billion, with shares appreciating nearly 32% in 2025, reflecting investor confidence in its strategy to leverage AI’s growth.
Moreover, Arm is not just innovating on its own; it’s also deeply involved as a technology partner in the Stargate initiative, a colossal $500 billion project aimed at building AI infrastructure. This involvement further cements Arm’s position in the AI ecosystem, potentially opening new revenue streams by selling more sophisticated technology to its existing customer base.
While this new direction for Arm introduces some competitive tensions, it also aligns with the broader industry trend of companies seeking to control more of their technology stack to capture more value from AI advancements. For Arm, this could mean not only growth in revenue but also a more significant role in shaping the future of computing technology, particularly in data centers where AI processing demands are soaring.
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