Key Points
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Nvidia expects to earn $20 billion from its Vera CPU revenue this year.
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Vera architecture is licensed from Arm.
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The shift toward agentic AI has driven a boom in Arm stock because of increased demand for CPUs.
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Shares of Arm Holdings (NASDAQ: ARM) were moving higher today on news from Nvidia (NASDAQ: NVDA) first-quarter earnings report last night.
While Nvidia stock was actually down this morning, one of the big news items from its report was that Nvidia said it expected $20 billion in CPU revenue this year, with much of that coming from its Vera CPU, which is licensed from Arm.
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Arm investors cheered the news, as it should translate into increased royalty revenue for the company, which is best known for its battery-efficient CPU architecture.
As of 10:47 a.m. ET, Arm Holdings stock was up 8.6%.
Image source: Getty Images.
Arm gets another leg up
Agentic AI and the need for greater inference are driving demand for CPUs, and Nvidia said that the new Vera CPU, which pairs with the new Rubin GPU platform, will open up a $200 billion total addressable market for the company. It also forecast $20 billion in total CPU revenue this year, which sets it up to become the world’s leading 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 from AMD and Intel.
What it means for Arm
Arm doesn’t make its royalty rates public, but Vera is using the Arm v9, the latest version of its CPU, which has double the royalty rate of the v8. Arm also said data center revenue more than doubled in its most recent quarter, and it expects that segment to soon be its biggest, topping smartphones, so Nvidia’s $20 billion forecast could be significant for Arm.
Though it’s difficult to quantify, Nvidia’s push into CPUs is a clear win for Arm. It’s not surprising to see the stock moving higher on the news.
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Jeremy Bowman has positions in Advanced Micro Devices, Arm Holdings, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool has a disclosure policy.
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