Arm Holdings, the UK-based chip designer, has ridden the wave of artificial intelligence (AI) innovation to astounding heights, with its shares soaring by 25% on its first trading day alone. The company’s cutting-edge chip designs have positioned it as a linchpin for tech behemoths such as Advanced Micro Devices, Apple, Nvidia, and Qualcomm.
Arm’s ambitious target of reaching 100 billion AI-ready devices by next year, coupled with its swift inclusion in the Nasdaq-100 Index, underscores its colossal influence and expanding footprint in the tech landscape.
About Arm Holdings Stock
Established in 1990, Arm Holdings is a trailblazer in computing innovation. Boasting a market capitalization of approximately $118.9 billion, the company’s energy-efficient processors and software platforms power over 290 billion chips globally, driving advanced computing across a diverse array of devices.
Despite a recent 40% pullback from its July peak of $188.75, Arm’s shares have surged by almost 48% in 2024, vastly outperforming the broader S&P 500 Index return of 8.6% year-to-date.
Arm Slides After Q1 Earnings
Following Arm’s Q1 earnings announcement, the stock plummeted by 15.7% due to heavy selling pressure. Despite a 39% year-over-year revenue increase to $939 million and better-than-expected earnings per share growth of 67%, Arm’s underwhelming full-year forecast overshadowed its stellar performance and led to a market decline.
The company’s decision to halt the disclosure of Arm-based chip shipments further exacerbated market pessimism surrounding the stock.
What Do Analysts Expect For Arm Holdings Stock?
While Arm’s full-year guidance disappointed, Wall Street analysts rushed to the company’s defense post-Q1 earnings announcement. Bank of America’s Vivek Arya highlighted the company’s strong licensing performance and strategic advantages, maintaining a “Buy” rating with a price target of $180.
Citi analyst Andrew Gardiner also expressed confidence in Arm, raising the price target to $170 and emphasizing the company’s long-term licensing strength amid near-term challenges.
With a consensus “Moderate Buy” rating, Arm Holdings stock holds significant upside potential according to analysts, with an average price target of $132.09, indicating a nearly 20% increase from current levels. Notably, Morgan Stanley’s Street-high target of $190 suggests a substantial rally of up to 72.5%.
