Arm Q2 revenue grew by 27%, driven by demand for AI

Arm announced Q2 revenue for fiscal year 2026 of $1.44 billion, a year-on-year increase of 27%, exceeding market expectations of $1.38 billion. The adjusted EPS is $0.52, higher than the expected $0.47. The company expects Q3 revenue to be around $1.54 billion, roughly in line with market expectations.

Growth in the data center business offset the weakness in the smartphone market, with licensing revenue increasing by 50% year-on-year to $773 million, and royalty revenue rising by 8% to $670 million. After the earnings report was released, Arm's stock price fluctuated in after-hours trading, currently down 3.8%.