Arm Holdings forecasts $1.38 billion while smartphone royalties concern investors

Business Jul 30, 2026

Arm Holdings just posted strong Q2 guidance, thanks to high demand for AI and data center chips, forecasting $1.38 billion, which topped Wall Street's expectations.

But even with this win, Arm's stock slid about 7% after hours because investors are worried about weaker smartphone royalties.

Arm leans into AI and infrastructure

Big names like Alphabet and Amazon are using Arm's chip designs for their own AI processors, helping boost royalty and licensing revenues by over 20% year over year.

Still, Arm flagged that smartphone royalties could dip next quarter due to memory shortages slowing production.

The company is leaning more into AI and infrastructure markets to balance out the slowdown in its traditional smartphone business.