ARM vs MTSI

Key Takeaways

• Arm Holdings reported Q3 FY2026 revenue of $1.24 billion, up 26% YoY, with non-GAAP EPS of $0.43, beating estimates.
• MACOM Technology Solutions posted Q1 FY2026 revenue of $271.6 million, up 24.5% YoY, with adjusted EPS of $1.02, exceeding expectations.
• Both companies showed robust growth in AI and data center segments, underscoring semiconductor demand.
• Arm's royalty revenue hit a record $737 million, up 27% YoY, driven by data center and smartphone adoption.
• MACOM guided Q2 revenue to $281–$289 million, signaling continued expansion in telecom and data center markets.
• Arm's market cap stands at approximately $133 billion, dwarfing MACOM's $18 billion, reflecting scale differences.

Earnings Context and Why This Comparison Matters

Arm Holdings plc (ARM) and MACOM Technology Solutions Holdings, Inc. (MTSI) operate in the semiconductor ecosystem, where ARM licenses processor IP central to AI chips, smartphones, and data centers, while MACOM designs analog and mixed-signal semiconductors for RF, telecom, and data center applications. Recent earnings from both highlight strength in AI infrastructure and high-speed connectivity, key growth areas. Comparing them reveals how IP licensing provides high-margin scalability for ARM, contrasting MACOM's execution in high-bandwidth components amid rising data demands.

Arm Holdings Focus

Arm Holdings released Q3 FY2026 results (quarter ended December 31, 2025), posting record revenue of $1.242 billion, a 26% increase year-over-year. Royalty revenue reached $737 million, up 27%, fueled by Armv9 architecture and Compute Subsystems (CSS) in data centers and smartphones. License revenue was $505 million, up 25%. Non-GAAP EPS came in at $0.43, surpassing expectations of $0.41, with non-GAAP gross margin at 98.3%. Operating metrics included annualized contract value (ACV) of $1.62 billion, up 28%, though remaining performance obligations (RPO) dipped 8% to $2.148 billion. Highlights included hyperscaler share nearing 50%, over 1 billion Neoverse cores deployed, and CSS shipments from top Android vendors. Q4 guidance projects $1.47 billion revenue (±$50 million) and non-GAAP EPS of $0.58 (±$0.04).

MACOM Technology Solutions Context

MACOM reported fiscal Q1 2026 results (ended January 2, 2026), with revenue of $271.6 million, up 24.5% year-over-year and 4% sequentially. Adjusted EPS was $1.02, beating consensus by $0.023, while GAAP EPS was $0.64. Adjusted gross margin expanded to 57.6%. Growth stemmed from data center and telecom strength, with book-to-bill at 1.3x. Q2 guidance calls for $281–$289 million revenue, adjusted gross margin of 57–59%, and adjusted EPS of $1.05–$1.09. MACOM raised its data center growth outlook to 35–40%, emphasizing 1.6T speeds and strategic manufacturing expansions.

Head-to-Head Earnings and Market Comparison

ARM's revenue scale ($1.24B vs. $272M) and 98% gross margins eclipse MACOM's, reflecting IP's asset-light model versus MACOM's fab-based production. Both grew ~25% YoY, with ARM's royalties offering recurring stability and MACOM's beats signaling operational leverage. AI/data center drives both: ARM via CPU IP in hyperscalers (100%+ royalty growth), MACOM in high-speed optics/RF. ARM faces RPO softness but boasts ACV momentum; MACOM risks supply chain volatility but benefits from diversified end-markets (telecom, defense). ARM's $133B market cap signals premium positioning; MACOM's $18B reflects growth potential amid analog demand. Sentiment favors ARM's ecosystem moat, though MACOM's margins (15.9% operating) show resilience.

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Tickeron AI Verdict

Tickeron AI favors ARM with 65% probability over the next quarter, citing superior earnings quality, trend strength in AI royalties, and ecosystem stability despite scale advantages. MACOM offers higher growth volatility but trails in margins and positioning.

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