ARM earnings raise a bigger question about where AI money is actually going

ARM raised its revenue outlook, mainly driven by stronger adoption of its chip architecture in data centers, which they link directly to AI infrastructure demand. What stood out to me is not just the beat itself, but what it implies about where the real money in AI is currently flowing. On the surface, a lot of attention is on model companies and end applications, but ARM’s commentary feels like a reminder that the infrastructure layer is still seeing very strong demand, especially around data center royalty growth. They also mentioned visibility into 2027 and 2028 demand tied to their newer data center focused CPU, which suggests this is not just a short term cycle story. At the same time, I keep wondering whether this strength is actually incremental, or if the market has already been pricing in this level of AI driven infrastructure growth for a while now. My current thinking is split. On one hand, AI capex still looks early when you consider global data center buildout. On the other hand, when so many names across the stack are already running, it makes me question how much upside is still left in the obvious parts of the trade. Curious how others are thinking about this. Is ARM more of a confirmation that AI infrastructure demand is still early, or a sign that expectations across the sector are already fairly rich