Ticker Teardown Dossier
Arm ($ARM), taken apart the way the desk does.
Arm (ARM) Teardown Dossier · As of 2026-11-04, refreshed after FQ2 2027 results
The ARM dossier is the desk's Arm teardown written out as a document, plus what a five-minute video cannot carry: the last eight quarters of Arm's own SEC filings in one table (fiscal years for a foreign filer whose quarterly reports carry no structured data), a peer comparison with numbers, the level map rebuilt from the latest close, and a link to every filing used. Rebuilt after each quarterly print.
Look inside before you buy
2,089 words · about 9 min to read · 10 sections · data as of 4 November 2026 · last refreshed after FQ2 2027 results
Table of contents
- What is in this dossier
- What this is not
- 1. The teardown
- The setup
- The business: not a chip company
- The model: the royalty engine
- Who pays the toll: the AI stack
- Why the selloff: mind the multiple
- The bear case
- The chart: one honest level
- The verdict
- 2. What changed since it was written
- 3. The filings: the last eight quarters
- 4. Valuation against the peers
- 5. Level map
- 6. Sources
- 7. What this dossier cannot do
- More dossiers in this theme
Excerpt
1. The teardown
Written 2026-09-09, with prices as of 2026-09-11. Figures in this part are as the desk read them that day; parts 2 to 5 carry the numbers as of 2026-11-04.
The setup
Arm Holdings, ticker ARM, is down 40% in three months. Down 15% in the last month alone. And it is still up 77% on the year. The question for the desk is the one we always ask. Is this broken, or is this on sale?
The business: not a chip company
Start with what Arm actually is, because it is not a chip company. Arm does not build a single processor that it sells. It licenses the blueprint. Every phone in your pocket, and every custom server chip inside a hyperscaler data center, runs on an instruction set that Arm owns. Arm designs the core, hands the design to the people who make the silicon, and takes a cut of every chip that ships. It is a tollbooth on compute. You do not have to guess which chip company wins. If the thing has a processor in it, Arm most likely gets paid.
The model: the royalty engine
Here is how the toll works, and this is the part the market keeps underpricing. Arm makes money two ways. An upfront license fee when a customer takes the design, and then a royalty on every single chip built from it. The royalty is the engine. And the newest generation, version nine, carries a royalty rate around 2x the previous generation. Read that carefully. That is more money per chip, on the exact same unit, before anyone sells a single extra one. As customers move from version eight to version nine, the average price Arm collects per chip rises on its own. Growth without needing the world to buy more phones.
One table from the document
3. The filings: the last eight quarters
| USD millions, period ended | 2024-12-31 | 2025-03-31 | 2025-06-30 | 2025-09-30 | 2025-12-31 | 2026-03-31 | 2026-06-30 | 2026-09-30 |
|---|---|---|---|---|---|---|---|---|
| Fiscal period | FQ3 2025 | FQ4 2025 | FQ1 2026 | FQ2 2026 | FQ3 2026 | FQ4 2026 | FQ1 2027 | FQ2 2027 |
| Source filing | 6-K 2025-02-05 | 20-F 2025-05-28 | 6-K 2025-07-30 | 6-K 2025-11-05 | 6-K 2026-02-04 | 20-F 2026-05-26 | 6-K 2026-07-29 | 6-K 2026-11-04 |
| Revenue | 983.0 | 1,241 | 1,053 | 1,135 | 1,242 | 1,490 | 1,289 | 1,443 |
| Gross margin | 97.2% | 97.7% | 97.2% | 97.4% | 97.6% | 97.9% | 97.2% | 97.1% |
| Operating income | 175.0 | 410.0 | 114.0 | 163.0 | 185.0 | 438.0 | 91.0 | 201.0 |
| Net income | 252.0 | 210.0 | 130.0 | 238.0 | 223.0 | 313.0 | 270.0 | 130.0 |
| Operating cash flow | 423.0 | 258.0 | 332.0 | 567.0 | 365.0 | 260.0 | 902.0 | 207.0 |
| Capex | -63.0 | -74.0 | -154.0 | -138.0 | -179.0 | -74.0 | -197.0 | -72.0 |
| Free cash flow | 360.0 | 184.0 | 178.0 | 429.0 | 186.0 | 186.0 | 705.0 | 135.0 |
| Cash and equivalents | 2,036 | 2,085 | 1,956 | 2,518 | 2,807 | 2,751 | 3,058 | 3,251 |
| Debt (book, excl. leases) | n/r | n/r | n/r | n/r | n/r | n/r | n/r | n/r |
| Diluted shares (M) | 1,064 | 1,063* | 1,065 | 1,069 | 1,069 | 1,068* | 1,078 | 1,079 |
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What the dossier has that the video does not
The filings themselves: revenue, gross margin, operating income, net income, operating cash flow, capex, free cash flow, cash, debt and diluted shares, quarter by quarter, each column dated with the filing it comes from. A foreign filer whose quarterly reports carry no structured data gets its fiscal years, and the dossier says so.
Never stale
Every dossier carries an "as of" date and the quarter it was last refreshed after. It is rebuilt after each print, and the desk's daily check flags any dossier left more than 45 days without a refresh. The written teardown keeps its date, and a "what changed since" section gives the move in the price and the filings since.
What is inside
- The teardown in writing: the business, the bull case, the full bear case and the verdict, dated.
- What changed since it was written: the price move and every SEC filing since.
- Eight quarters of the company's own SEC filings in one table, each column dated, with a plain read of what the table says.
- Peers with numbers: market cap, revenue growth, operating margin, EV / sales and distance from the 52-week high.
- The level map rebuilt from the latest close: where the price sits against the 52-week range and each level.
- Sources: a link to every filing and results release used.
Buy it if
- You hold or watch $ARM and want a structured read before acting.
- You want levels you can check on the chart, not an opinion.
Skip it if
- You want a buy signal. A dossier explains and maps; it does not signal.
- You want every name on the desk. The Teardown Library covers every dossier, current and future, for less than four dossiers.
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An educational research publication, not investment advice, trade signals, a managed account, or an advisory service. Nothing in it is a recommendation to buy or sell any security. See our disclosures.