I. What exactly does ARM do?

Many people think ARM is a chip company, but that's not entirely correct. It doesn't manufacture chips itself; it only sells blueprints and technology licenses, somewhat like a real estate developer selling blueprints instead of building the houses.

ARM mainly sells:

1. CPU Architecture Licenses

For example:

Apple A-series chips

Apple M-series chips

Qualcomm Snapdragon

MediaTek Dimensity

Some of NVIDIA's AI chips

Amazon Graviton

Many of these chips are developed based on the ARM architecture (ARM sets the rules, and chip companies design their own CPUs according to those rules).

2. License Fees + Royalties

ARM's revenue model is very simple:

Step 1:

Sell design licenses.

Step 2:

Continue to take a cut after the client's chips are sold (a core and highly profitable revenue stream, taking a 1-2% commission per chip).

Therefore, ARM has an excellent business model: the more chips sold globally, the more money ARM makes.

ARM's strongest market is mobile.

Currently, globally:

Smartphones

Tablets

Smartwatches

Over 90% of processors are based on the ARM architecture.

It can be said:

The phone in your hand is very likely making money for ARM.

In recent years, ARM has also begun entering:

AI servers

Data centers

Automotive chips

Robotics

Edge computing

II. What is ARM's moat?

First layer: Ecosystem

Millions of developers worldwide are developing software within the ARM ecosystem.

Second layer: Customer lock-in

ARM's customers are almost all tech giants (Apple, Qualcomm, and the latest, NVIDIA).

These companies have invested heavily in developing ARM-based products and are unlikely to switch easily.

Third layer: Low-power advantage

ARM's biggest technical advantage is:

An excellent balance between performance and power consumption.

Phones chose ARM in the past because it saved power.

Now AI servers choose ARM also to save on electricity costs.

As global data center power costs rise, this advantage becomes increasingly significant.

Especially in the last two years:

AI server demand has grown rapidly.

Revenue growth related to data centers is significantly higher than traditional mobile business.

This is also the part the capital market is most focused on.

III. Why is the market so enamored with ARM?

Because the market has realized ARM's story is no longer just about mobile phone companies.

ARM's old logic was:

The more phones sold, the more money ARM makes.

Now it's become:

The more AI servers, the more money ARM makes.

And the future AI data center market could be larger than the mobile phone market.

So the market has started revaluing ARM.

Many institutions believe:

ARM has the potential to become one of the most important infrastructure companies in the AI era.

What institutions value most isn't its current revenue, but its future position.

ARM is somewhat like a "toll highway" in the chip industry.

It might not be the most profitable chip company, but it's likely one of the most stable revenue collectors.

III. Summary and Viewpoint

It can be said that subsequent self-developed AI chips, both domestic and international, will basically use ARM architecture design, such as previous ones from Xiaomi, Alibaba, and recent ones from ByteDance, etc. This news will further boost its stock price and institutional outlook for its future.

I think it will definitely rise significantly later, possibly even breaking 500, because NVIDIA's June chips are a collaboration with it.

The above is just a personal opinion and does not constitute investment advice.

$Micron Tech(MU.US)$Intel(INTC.US)$Arm(ARM.US)$Dell Tech(DELL.US)