Simply Wall St
5 min read
Arm Holdings recently saw its fair value estimate adjust from about US$164.85 to roughly US$163.25 per share, along with a small uptick in the discount rate from 11.25% to around 11.28% and a slight increase in modeled revenue growth from 22.13% to roughly 22.17%.
This fine tuning reflects a market that is weighing positive signals around licensing strength, AI driven projects, and design wins against new questions on execution risk and how Arm’s evolving business mix could affect returns over time.
As you read on, you will see how these opposing factors are reshaping the story around Arm and how you can stay informed about future narrative shifts as they occur.
Analyst Price Targets don’t always capture the full story. Head over to our Company Report to find new ways to value Arm Holdings.
🐂 Bullish Takeaways
Several firms, including Loop Capital, Morgan Stanley, TD Cowen, and JPMorgan, highlight solid recent earnings, with commentary pointing to stronger licensing and royalty revenues and what they describe as solid momentum flowing out of the latest quarter.
Loop Capital, Morgan Stanley, TD Cowen, and JPMorgan all lifted their price targets into the US$180 to US$190 range, tying their more constructive stance to design win traction across end markets and what they see as growing AI related activity from edge to cloud.
Analysts at these firms generally reward Arm for execution around licensing, the ramp in DC and AI linked royalties, and a willingness to increase operating expenses to pursue a larger set of AI projects, while still pointing to what they view as solid cost discipline overall.
Some of the bullish research also highlights higher value capture in royalties as a positive for long term growth prospects, especially if AI linked workloads keep Arm based designs in focus across data center and edge use cases.
🐻 Bearish Takeaways
Raymond James assumed coverage with a Market Perform rating and no price target, signaling a more cautious stance relative to the firms that raised targets.
The Raymond James analyst flags Arm’s exploration of a move further into the fabless semiconductor business as a key risk, suggesting that while this could support higher profits, the transition period could lead the market to penalize Arm’s valuation multiple.
Cautious commentary centers on execution risk around that potential business shift and on the idea that, during any transition, some of the upside that bullish analysts see from AI and licensing strength could be tempered by uncertainty around returns and consistency of performance.
Do your thoughts align with the Bull or Bear Analysts? Perhaps you think there’s more to the story. Head to the Simply Wall St Community to discover more perspectives or begin writing your own Narrative!
NasdaqGS:ARM 1-Year Stock Price Chart
Arm announced a new Physical AI division focused on robotics, introduced as part of a broader reorganization highlighted at CES. The move is aimed at supplying chips and designs for humanoid and other physical robots, according to Reuters.
South Korea’s antitrust regulator, the Korea Fair Trade Commission, inspected Arm’s Seoul offices as part of an inquiry into its licensing practices. The inspection followed a Qualcomm complaint alleging that Arm is restricting access to its technology and affecting competition, Bloomberg reported.
SoftBank reportedly explored a potential takeover of Marvell and considered combining Marvell with Arm. However, discussions did not result in an agreement on terms, according to Bloomberg.
OpenAI is reported to be working with Arm on a CPU that is intended to pair with an AI chip OpenAI is developing with Broadcom, with TSMC expected to manufacture the chip. This points to Arm’s role in AI focused compute projects, The Information reported.
Fair value edged down slightly from about US$164.85 to about US$163.25 per share.
The discount rate moved up marginally from 11.25% to about 11.28%, implying a slightly higher required return in the model.
Revenue growth was adjusted up a bit from 22.13% to roughly 22.17% in the forward assumptions.
The net profit margin was nudged higher from about 30.79% to around 30.93% in updated estimates.
The future P/E was trimmed modestly from about 99.24x to roughly 97.84x, reflecting a slightly lower assumed premium multiple.
Narratives on Simply Wall St let you connect the story you believe about a company with the numbers behind it, linking Arm’s business outlook to estimates for future revenue, earnings and margins, and then to a fair value. Hosted on the Community page used by millions of investors, Narratives help you decide how to act by comparing that Fair Value with the current share price, and they update automatically as fresh news or earnings information comes through.
Head over to the Simply Wall St Community and follow the narrative on Arm Holdings to stay on top of how the story and the numbers evolve:
How AI licensing royalties, custom silicon and Physical AI projects are reflected in revenue, earnings and margin forecasts for Arm.
What the consensus assumptions imply for 2028 earnings, profit margins, future P/E and the current analyst price target relative to today’s price.
Which risks around new compute segments, smartphone exposure, higher R&D spend and China are most likely to shift the fair value range.
Read the full Arm Holdings Narrative on Simply Wall St and track how each update feeds through to the latest fair value estimate.
Curious how numbers become stories that shape markets? Explore Community Narratives
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ARM.
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