Arm Holdings reported second-quarter fiscal 2027 revenue and adjusted earnings above Wall Street estimates on Wednesday. The Cambridge-based chip designer, which is majority-owned by SoftBank Group, said royalty income from data-centre and smartphone chips drove the result and issued third-quarter guidance above analysts' expectations. Arm said royalty revenue grew faster than licensing revenue during the quarter.

The company attributed the gain to higher per-chip fees on its Armv9 architecture and its Compute Subsystems products. It also cited the growing use of Arm-based processors in hyperscale cloud servers built by Amazon Web Services, Google, Microsoft and Nvidia.

The results followed a turbulent week for technology stocks. Disappointing earnings from several large tech companies had prompted a sell-off in semiconductor shares. Investors had been watching Arm's report closely for evidence that spending on artificial-intelligence infrastructure was still feeding through to chip designers and not only to the makers of accelerators.

Chief executive Rene Haas told analysts on the earnings call that demand from data-centre customers remained strong. He said Arm's share of the server CPU market continued to rise as cloud providers designed custom silicon to cut power consumption. He also pointed to rising Arm content in AI-capable smartphones and PCs as a second engine of royalty growth.

The quarter tested whether Arm could keep growing while memory shortages constrained handset production across the industry. Analysts at several Wall Street banks had flagged the risk that weaker smartphone volumes would weigh on royalties. Arm's above-consensus outlook suggested that higher royalty rates were offsetting softer unit shipments.