Hyperscaler insourcing vs. Arm royalty exposure
Key Questions
What is the projected Arm dominance in hyperscaler AI CPUs?
By 2029, 90% of custom AI CPUs from hyperscalers like AWS (Graviton), Azure (Cobalt), and others (Axion, MTIA) are expected to be Arm-based. This underscores Arm's royalty exposure in insourcing trends.
What revenue ramps are expected from AGI CPUs in hyperscalers?
AGI CPU ramps with Meta, OpenAI, and China are forecasted at $1B for FY28 and $15-25B for FY31. These contribute to Arm's growth amid hyperscaler shifts.
How does Anthropic's growth impact hyperscaler capex?
Anthropic reached $30B ARR in April 2026, up 30x YoY, reinforcing $600B+ annual capex from MSFT, AMZN, META, GOOG, and Oracle. This drives demand for Arm-based compute.
What compute deals has Anthropic secured?
Anthropic signed deals with Google for TPU capacity and Broadcom for multiple gigawatts, challenging Nvidia. Broadcom's ASICs target a $60B TAM versus Nvidia's GPUs.
What risks are associated with data center developments?
DC NDAs have sparked bans in 10 states, potentially risking ramps. Overall capex is projected at $700B with a $100B data center TAM.
Why are major hyperscalers moving to Arm?
Every major hyperscaler is adopting Arm for custom AI CPUs to reduce costs and optimize for AI workloads, moving beyond Nvidia GPUs. Examples include Axion, Graviton, and Cobalt.
How does Broadcom position against Nvidia in AI?
Broadcom's expanded AI chip deals, including with Anthropic, challenge Nvidia's dominance with ASICs targeting $60B TAM. This shifts focus from GPU hype to broader compute solutions.
What is the overall hyperscaler capex outlook?
Hyperscalers plan $600B+ in annual capex, fueled by AI demand like Anthropic's growth, supporting $700B total capex and $100B DC TAM. Arm benefits via royalty exposure.
90% custom AI CPUs Arm-based '29 (Axion/Graviton/Cobalt/MTIA); AGI CPU Meta/OpenAI/China ramps $1B FY28/$15-25B FY31; Anthropic $30B ARR Apr '26 (30x YoY) reinforces $600B+ capex (MSFT/AMZN/META/GOOG/Oracle); Anthropic Google/Broadcom compute deals, Broadcom ASICs $60B TAM vs Nvidia; DC NDAs spark bans in 10 states risking ramps; $700B capex/$100B DC TAM.