Arm Holdings shares jumped in after-hours trading Tuesday after CEO Rene Haas laid out ambitious long-term financial targets tied to the company’s first in-house central processing unit (CPU). The announcement marks a notable strategic shift for Arm, which for decades primarily licensed its architecture and collected royalties rather than selling its own chips.

At an event in San Francisco, Arm unveiled the new chip with Meta as the initial customer. Haas said the new CPU is expected to generate about $15 billion in annual revenue by 2031, with total annual revenue projected at $25 billion and earnings per share of $9.

Why the market cared

- Investors are re-rating Arm on a potentially larger addressable market if it can capture more value by selling silicon rather than only IP.

- The company framed ‘agentic AI’ as a driver of renewed demand for CPUs, arguing compute requirements are shifting.

- A move into direct chip sales also raises competitive questions, since Arm’s customers include major chipmakers and cloud providers.

Business model implications

Arm executives emphasized the new chip is additive—positioned as an option for buyers who may not want an IP-only model. The company’s CFO said the chip is being sold at roughly a 50% gross profit, suggesting a meaningful profit pool if volumes scale.

What to watch

Next catalysts include customer adoption beyond Meta, clarity on pricing, and whether Arm can expand in data center inference workloads without alienating its ecosystem partners.