Arm Holdings Has Fallen 28% in the Past Month. Should You Buy Before July 29 Earnings?
Arm stock has shed nearly a third of its value in just one month, yet the company's AI data center pipeline tells a very different story heading into Wednesday's earnings report.
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Arm Holdings (NASDAQ:ARM | ARM Price Prediction) enters Wednesday’s Q1 FY2027 earnings with its stock down nearly 28% over the past month. Meanwhile, the company has already booked more than $2 billion in demand for its new AGI data center CPU across fiscal 2027 and 2028, giving investors a measurable catalyst behind the next phase of growth.
Arm Has Already Booked $2 Billion in AI CPU Demand
On the Q4 earnings call, CEO Rene Haas confirmed “more than $2 billion of customer demand across fiscal 2027 and fiscal 2028″ for the Arm AGI CPU, double what was announced at launch six weeks earlier. Meta is the lead co-developer.
OpenAI, Cerebras, SAP, and Cloudflare are integrating. The data center CPU TAM is expected to be over $100 billion by 2030, and Arm currently holds roughly 50% CPU compute share among top hyperscalers. Data center royalty more than doubled year-over-year in FY2026 and is expected to double again in FY2027.
With 27 buy ratings against 2 sells and an average analyst price target of $300.73, $ARM appears to offer upside from its current price of $254.50.
Free Cash Flow Nearly Quintupled Last Year
FY2026 free cash flow reached $882 million, up 395.51% year-over-year, with operating cash flow of $1.524 billion (+283.88%) and gross margin at 92.48%. This is Arm’s third consecutive year of 20%+ revenue growth, with $4.92 billion in FY2026 revenue (+22.79% YoY). ACV climbed 22% YoY to $1.66 billion, giving forward visibility on the licensing base before royalties compound.
Why Nvidia’s AI Growth Also Benefits Arm
NVIDIA’s (NASDAQ:NVDA) next-generation Vera CPU is Arm-based, so every Vera rack pays Arm a royalty. NVIDIA already trades at a premium valuation, meaning that a marginal dollar of AI infrastructure spend is more valuable on Arm’s smaller $277.71 billion market cap.
Qualcomm (NASDAQ:QCOM) looks cheaper than ARM at a lower P/E multiple, but revenue fell 3.5% in its most recent quarter, and QCOM has a gross margin of 55.4% versus Arm’s 92%.
Lower Margins Are Funding Arm’s Next Growth Engine
Arm’s higher R&D spending is pressuring near-term margins, but it is also funding a data center business that management expects to reach $15 billion in annual revenue by FY2031. With free cash flow up nearly 400%, more than $2 billion in AGI CPU demand already booked, and the stock down 28% in one month, Wednesday’s earnings could reveal whether the pullback has created a buying opportunity.
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Thomas Richmond is a financial writer and content strategist with 5+ years of experience covering stocks and financial markets. He has published over 500 articles focused on individual stock analysis, helping investors better understand business fundamentals, stock valuations, and long-term opportunities.
Thomas previously served as a Content Lead at TIKR, a stock research platform, where he helped scale the company’s blog to hundreds of articles per month and contributed to a weekly newsletter reaching more than 100,000 investors.
Outside of work, Thomas enjoys weight lifting and soccer.
