Arm Holdings (NasdaqGS:ARM) is attracting attention as it steps further into the AI infrastructure scene. Recent collaborations with OpenAI, SoftBank’s chip unit, and Broadcom position Arm at the core of new AI server developments.
See our latest analysis for Arm Holdings.
Momentum has picked up for Arm Holdings, fueled by headline collaborations in AI hardware and fresh product launches. The company’s 1-year total shareholder return is 11.6%, and its share price has climbed 31% year-to-date. The past month’s 11.6% share price return suggests that investors are increasingly optimistic about Arm’s growth prospects as these new deals unfold and its AI ambitions come further into focus.
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But with investor optimism running high and analysts adjusting their expectations, the question now is whether Arm shares are attractively valued given future growth, or if the recent rally means all the good news is already included in the current price.
Arm Holdings closed at $168.16, putting its share price above the most widely followed fair value estimate of $152.59 and casting a spotlight on whether investors are getting ahead of fundamentals.
*Arm’s accelerating penetration in AI data centers, driven by hyperscalers shifting to custom silicon featuring Arm Neoverse CPUs, positions the company to capture significant royalty revenue growth, especially as their market share soars from around 18% to nearly 50% in a year.*
Curious how much those expanding margins and earnings projections drive this bold price tag? The narrative’s future scenario relies on aggressive growth in royalty streams and a premium market slice. Want to learn which ambitious numbers keep the story bullish despite a valuation that’s already sky-high? See exactly what could tip the scales. Read on to uncover the detailed playbook analysts are betting on.
Result: Fair Value of $152.59 (OVERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, mounting R&D costs and Arm’s heavy reliance on premium smartphones could hamper margin growth if new product segments fail to deliver as expected.
Find out about the key risks to this Arm Holdings narrative.
If you have a different perspective or prefer to dig into the numbers on your own, you’ll find it easy to build your own view of Arm’s story in just minutes. Do it your way
A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Arm Holdings.
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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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