For years, Arm (ARM) has played a key role in the development of processors for everything from the iPhone to data center chips. But now the company is expanding its reach with the debut of its first production data center processor: the Arm AGI CPU (central processing unit).
Arm has traditionally licensed its intellectual property to other companies to develop their own chips, including Nvidia (NVDA), which uses Arm’s capabilities in its Grace and Vera CPUs.
Graphics processing units, or GPUs, have dominated data centers thanks to their ability to train and run AI models. But as running those models becomes a more common use case than training and as the industry transitions toward agentic applications — AI that can perform tasks on your behalf — CPUs are becoming more important.
That provides Arm with the opportunity to launch its own processor. The company isn’t just debuting a chip, though; it’s also unveiling a server rack to run them at scale.
And while X86-based chips like those from Intel (INTC) and Advanced Micro Devices (AMD) generally dominate data centers, Arm said its CPU delivers twice the performance per rack compared to those other platforms.
Arm said it co-developed the AGI CPU with Meta (META), which is deploying them alongside its own custom chips inside its data centers.
Beyond Meta, Arm said it’s also working with Cerebras, Cloudflare (NET), F5 (FFIV), OpenAI (OPAI.PVT), Positron (POSC), Rebellions, SAP (SAP), and SK Telecom (SKM), which will use the chip for agentic AI applications, among others.
Arm stock rose 12% during premarket hours on Wednesday. Shares of Intel were up 3% and AMD gained 1% before the bell today.
Earlier this month, Meta and Nvidia announced an expanded deal in which Nvidia will provide the social media giant with the largest deployment of its Grace CPU-only servers to date.
Then just last week, AMD announced its own deal with Meta, which includes servers running the company’s Venice and next-generation Verano CPUs.
And during Intel’s Jan. 22 earnings call, CEO Lip-Bu Tan cited AI as a major driver for CPU demand.
“The continuing proliferation and diversification of AI workloads is placing significant capacity constraints on traditional and new hardware infrastructure, reinforcing the growing and essential role CPUs play in the AI era,” Tan said.
At Nvidia’s GTC event last week, CEO Jensen Huang spotlighted the company’s upcoming Vera CPU, which he said will launch as part of a server rack to power agentic AI applications.
The interest in CPUs doesn’t mean GPUs are going anywhere. The heavy-hitting processors are still necessary for running high-end AI models and will continue to do so for the foreseeable future.
Email Daniel Howley at dhowley@Pacthman.co. Follow him on X at@DanielHowley.
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