Actions of Arms (NASDAQ: ARM) were rising today on the news of NVIDIA (NASDAQ: NVDA) first quarter earnings report last night.
While Nvidia stock actually fell this morning, one of the big news from its report was that Nvidia said it expected $20 billion in CPU revenue this year, and much of that would come from its Vera CPU, which is licensed to Arm.
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Arm investors applauded the news, as it should translate into higher royalty income for the company, best known for its battery-efficient CPU architecture.
As of 10:47 a.m. ET, Arm Holdings shares were up 8.6%.
The arm lifts another leg
Agent AI and the need for greater inference are driving demand for CPUs, and Nvidia said the new Vera CPU, which is combined with the new Rubin GPU platform, will open a total market of $200 billion for the company. It also forecasts $20 billion in total CPU revenue this year, making it the world’s top CPU supplier.
Nvidia also said that Vera was built on custom Arm cores and delivers 1.5x faster performance per core and 4x more density per rack compared to x86 alternatives. amd and Intel.
What it means for the arm
Arm doesn’t make its royalty rates public, but Vera is using Arm v9, the latest version of its CPU, which has double the royalty rate of v8. Arm also said data center revenue more than doubled in its most recent quarter, and it expects that segment to soon be its largest, surpassing smartphones, so Nvidia’s $20 billion forecast could be significant for Arm.
Although difficult to quantify, Nvidia’s push into CPUs is a clear win for Arm. It’s not surprising to see stocks rise on the news.
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