JPMorgan: Arm (ARM) is seeing accelerated growth in royalties from AI and data center sectors. Cloud/AI-related royalties nearly doubled year-over-year in the last fiscal year, and server CPU royalties are expected to account for over 10% of the group’s total royalties by FY27. The in-house 3nm Arm AGI CPU is projected to generate $100M+ in revenue by the March quarter of 2027, with cumulative sales in FY27–FY28 likely surpassing $1B and potential demand exceeding $2B. Meta is expected to be a key customer. The next-gen 2nm AGI CPU is anticipated to begin deployment in the second half of 2027. The penetration of Ethos NPU in industrial, automotive, IoT, and robotics sectors is expected to contribute an additional 15%–20% growth in embedded royalties over the mid-to-long term. JPMorgan maintains an Overweight rating, with the core thesis being that AI computing power is shifting from single GPU to a heterogeneous architecture of GPU + XPU + CPU/DPU, and ARM stands to benefit from both IP royalty growth and the scaling of its in-house merchant silicon.