Investors are eyeing Arm Holdings (ARM), the chip designer behind many of the world's devices, as a key player in the AI revolution. Its designs power everything from smartphones to data centers. The company is set to report its fiscal Q3 2026 earnings on February 4th. This follows a strong previous quarter, driven by rising demand for AI computing.

Arm's business model involves licensing its processor designs to major tech companies, including Apple, Nvidia, and Microsoft. These companies then build their own custom chips. During the last quarter, royalty revenue hit a record $620 million, and license revenue increased to $515 million. Analysts predict a 20.9% revenue increase for fiscal 2026.

Wall Street analysts have a "Moderate Buy" rating on ARM stock, with an average target price suggesting a potential 51.5% upside. Arm is expanding its footprint across industries, including partnerships with Meta for improved AI efficiency. For the upcoming quarter, revenue is projected at $1.22 billion. Strong revenue allows for increased investment in R&D.