Sands Capital Management, LLC - International Growth on Arm Holdings
Thesis
Arm was purchased because Sands expects agentic AI to drive an inflection in CPU demand. CPUs are suited to scheduling, memory management, tool execution, and orchestration around AI workloads, which could increase their importance relative to GPUs. Sands expects CPU royalties to rise from about 10 percent of Arm revenue in 2026 to more than 30 percent by 2031. Arm's energy-efficient architecture and more than 90 percent smartphone share provide additional competitive advantages, while SoftBank ownership may create ecosystem upside.
“We expect agentic AI adoption to drive an inflection in CPU demand, increasing Arm’s CPU royalties from approximately 10 percent of revenue in 2026 to more than 30 percent by 2031.”