Analyst TD Cowen suggests that the future looks promising for Arm Holdings’ chip-design licensing business.
Analyst’s Take
Analyst Matthew Ramsay has reiterated an Outperform rating on Arm stock with a price target of $95. In his note titled “Fundamental Arm Thesis Gaining Momentum,” Ramsay highlights Arm as a crucial IP provider and scale enabler, expressing confidence in the company’s fundamentals and financial momentum over the medium term.
Market Performance
Despite a 3.3% decline to $133.43 in early trading on Tuesday, Arm shares are showing resilience amidst market fluctuations. Ramsay notes the significance of Arm technology, powering over $200 billion in industry chip revenue annually, including Android and Apple iPhone platforms.
Future Projections
Ramsay anticipates stock volatility with the upcoming IPO lockup expiration on March 12, affecting insider selling. While SoftBank holds a substantial ownership stake in Arm, the analyst suggests no immediate plans for significant divestment.
Recent Performance
Arm witnessed a surge in its stock price following a strong performance in the December quarter and a positive outlook for the March quarter. Management’s investor letter highlighted market share gains in cloud-server and auto segments, emphasizing collaborations with Nvidia GH200 AI Superchip datacenter systems incorporating Arm technology.
Company Overview
Arm, which went public in September at $51 per share, generates revenue through licensing its chip architecture and designs to semiconductor companies and hardware manufacturers. The transition to Armv9 technology is expected to drive higher royalty rates compared to Armv8 products.
For more information on the evolving landscape of Arm Holdings and the chip-design industry, continue to follow the latest updates.