Arm and Intel: Divergent Financial Outcomes in 2025
Arm posted a 22.8% revenue increase and strong cash flow, while Intel reported a net loss and negative free cash flow as it pivots to foundry services.
Arm Holdings delivered a fiscal year ending March 2026 with revenue of $4.9 billion, a 22.8% year-over-year increase. The company reported net income of $904 million, establishing a net margin of 18.4%. This performance reflects its licensing model, which avoids the capital expenditure burdens of chip fabrication while capturing royalties from high-volume mobile and emerging server devices.
Intel Corporation, in contrast, reported revenue of $52.9 billion for the fiscal year ending December 2025, marking a 0.5% decline. The company posted a net loss of $267 million, resulting in a negative net margin of 0.5%. These figures underscore the financial strain of Intel’s strategic pivot toward manufacturing chips for external clients alongside its proprietary product lines.
Cash Flow and Balance Sheet Strength
Arm’s balance sheet as of March 2026 shows a debt-to-equity ratio of 0.1x and a current ratio of 6.0x. Free cash flow reached $979 million for the period. However, stock-based compensation accounted for approximately 69% of operating cash flow, a significant portion that inflates reported cash generation metrics due to non-cash expense add-backs.
Intel’s December 2025 balance sheet indicates a debt-to-equity ratio of 0.4x and a current ratio of 2.0x. Free cash flow was negative $4.9 billion for the fiscal year. Stock-based compensation represented roughly 25.1% of operating cash flow, similarly affecting the reported cash position by adding back non-cash costs.
Strategic Risks and Government Relations
Arm faces concentration risk in the smartphone market and potential competition from open-source architectures. Its growth depends on maintaining technological leadership in compute platforms. Intel navigates more complex legal and regulatory challenges, including a shareholder lawsuit regarding its 10% equity stake granted to the U.S. government. This arrangement introduces reputational and financial risks as management balances commercial foundry operations with public policy obligations.
Market Positioning and Competitive Dynamics
The two companies are increasingly competing as Arm expands into server markets and Intel opens its fabs to outside designers. According to GN stocks/chips analysis, Arm’s asset-light model provides margin stability, while Intel’s capital-intensive foundry strategy carries higher execution risk. Investors must weigh Arm’s high-margin licensing against Intel’s scale in PC and data center hardware.
