As the industry races to build faster chips for smartphones and artificial intelligence, one company appears positioned to gain regardless of which manufacturer comes out on top: ARM.
According to Yahoo Finance, ARM stock stands to benefit "no matter who wins the smartphone and AI chip races." The reason lies in ARM's unusual business model. Rather than manufacturing chips itself, ARM licenses its chip designs and collects royalties. Per the reporting summarized by Bing News, ARM "collects royalties from every chipmaker, including the ones it competes with."
That structure turns fierce competition among chipmakers into a steady stream of income for ARM. When rival companies fight to build the best processor for the next flagship phone or AI data center, many of them still build on ARM's underlying technology — meaning ARM earns money on the outcome either way.
The reporting also points to a notable shift in the market for AI. According to the summary from Bing News, ARM "now leads x86 in AI servers." The x86 architecture, long dominant in the server market, has traditionally powered the computers that run large-scale computing tasks. ARM pulling ahead in AI servers marks a meaningful change in a space that has been defined by x86 for decades.
Why it matters: The companies designing and selling chips grab most of the headlines, but ARM's licensing-and-royalty approach lets it profit from the entire industry's growth rather than betting on a single winner — a position that looks especially valuable as AI drives demand for ever more powerful hardware.