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The surge in Arm's data center presence is fueled by the rapid expansion of artificial intelligence, Mohamed Awad, the company’s infrastructure chief, told Reuters.
Arm Holdings (ARM) shares declined more than 2% on Monday afternoon, tracking broader market weakness, amid a Reuters report stating that the company expects its share of the global data center central processing unit (CPU) market to climb to 50% by the end of 2025.
That would mark a significant jump from about 15% in 2024.
Mohamed Awad, Arm's infrastructure chief, told Reuters that the surge in Arm's data center presence is being fueled by the rapid expansion of artificial intelligence (AI).
Arm processors often serve as “host” chips in AI computing systems, directing traffic between other specialized AI chips.
Major tech firms have already adopted Arm’s technology in their data centers. Nvidia (NVDA) integrates an Arm-based chip called Grace into its advanced AI systems, which feature its latest Blackwell GPUs.
Amazon.com (AMZN) has also embraced Arm, with its in-house data center CPUs accounting for more than half of the new chip capacity it has added over the last two years, the company said in December.
Alphabet's Google (GOOG) (GOOGL) and Microsoft (MSFT) have similarly developed data center chips based on Arm’s architecture.
Awad highlighted that Arm-based processors generally consume less power than competing chips from Intel (INTC) and Advanced Micro Devices (AMD), a key advantage as AI data centers drive up global electricity usage.
That energy efficiency has made Arm’s technology increasingly attractive to cloud computing firms.
Additionally, Awad noted that data center processors typically incorporate more of Arm’s intellectual property than chips used in less complex devices, allowing the company to earn higher royalty rates.
"We've gotten to the point where software is actually being developed for Arm first and foremost," he said.
On Stocktwits, retail sentiment around Arm’s stock remained in the ‘neutral’ zone.
One user projected a potential drop to $70 per share, implying a downside of approximately 33%.
Another trader noted they were still holding Arm shares despite recent declines.
Arm’s stock has fallen over 15% in 2025 and is down roughly 16% over the past year.
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