By Leo Sun, The Motley Fool
Publication Date: 2026-06-04 18:30:00
Arm‘s (NASDAQ: ARM) stock has surged more than 250% in 2026. A large portion of that gain can be attributed to Nvidia‘s (NASDAQ: NVDA) introduction of a new AI chip for Windows PCs at Computex in early June. Nvidia will design the chip, but it will be built on Arm’s architecture and could significantly boost the chip designer’s royalty and licensing revenue.
Is it too late to buy Arm’s high-flying stock to profit from those gains? Let’s review its business model, other recent catalysts, and valuations to find out.
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How fast is Arm growing?
Arm’s chip designs are used in about 99% of the world’s smartphones. It took over the market by designing smaller and more power-efficient chips than Intel and AMD. By prioritizing low power consumption over raw processing power, Arm’s chip designs were ideal for mobile devices, wearables, cars, and Internet of Things (IoT) devices.
Instead of producing its own chips, Arm initially licensed its designs to chipmakers like Qualcomm, MediaTek, Nvidia, and Apple. Arm still generates most of its revenue from those licensing deals, but it launched its own first-party data center chips (manufactured by TSMC) for hyperscalers in 2025.
In fiscal 2025 (which ended in…
