AI Drives Growth Opportunities for Arm and Qualcomm
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 7 hours ago
0mins
Source: Fool
- Arm Revenue Growth: In Q1 2026, Arm's revenue grew 20% year-over-year to $1.5 billion, driven by its licensing and royalty-based business model, resulting in a healthy 21% net income margin, indicating strong market demand and profitability.
- Qualcomm Revenue Fluctuations: Despite Qualcomm's net income margin nearing 70% in Q1, its revenue fell 3.5% year-over-year, reflecting challenges in its strategic shift from the handset market to automotive, IoT, and data center segments, necessitating close monitoring of future growth potential.
- Market Competition Analysis: Over the past three years, Arm's stock has surged nearly 600%, compared to Qualcomm's approximately 123% return, highlighting Arm's increasing competitiveness in the semiconductor industry, particularly in automotive and AI applications.
- Future Outlook: As Qualcomm adjusts its product lineup to seize opportunities in data centers and AI-driven consumer devices, it will be crucial to observe whether it can accelerate revenue growth in the coming years while Arm continues to expand its market share.
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Analyst Views on ARM
Wall Street analysts forecast ARM stock price to fall
24 Analyst Rating
19 Buy
4 Hold
1 Sell
Strong Buy
Current: 335.270
Low
120.00
Averages
160.58
High
201.00
Current: 335.270
Low
120.00
Averages
160.58
High
201.00
About ARM
Arm Holdings plc is a United Kingdom-based company. The Company is engaged in the design of central processing units (CPUs) and compute platforms for semiconductor chips. It develops and licenses CPU products and related technology. Its cloud and data center solutions include Arm AGI CPU and Arm Neoverse Compute Subsystems. The Arm Agentic Generalized Infrastructure (AGI) CPU is a production-ready system on a chip (SoC) for artificial intelligence (AI) data centers, delivering compute at scale. The Arm Neoverse Compute Subsystems (CSS) are pre-validated, performance-optimized compute platforms designed to accelerate infrastructure silicon development. The Company's primary markets include smartphone applications, processors and other chips used in mobile phones, consumer electronics, networking equipment, cloud and data center servers, automotive applications, Internet of Things (loT) and other embedded computing devices.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Comparative Growth Analysis of Qualcomm and Arm
- Revenue Growth Comparison: Arm achieved a 20% year-over-year growth in Q1 2026, while Qualcomm's revenue fell by 3.5%, indicating Arm's stronger growth potential in the market, which may attract investor interest in its future performance.
- Profitability Analysis: Arm's net income margin stands at 21%, while Qualcomm boasts nearly 70%, indicating Qualcomm's strong profitability; however, its slowing revenue growth may impact long-term investment appeal.
- Market Transformation Strategy: Qualcomm is shifting focus from the handset market to sectors like automotive, IoT, and data centers, and if its AI strategy is successfully implemented, it could accelerate revenue growth and narrow the gap with Arm.
- Investor Focus: Despite Arm's stock rising nearly 600% over the past three years, Qualcomm's growth is also noteworthy, especially during its transformation, prompting investors to closely monitor its performance in AI and consumer devices.
See More
AI Drives Growth Opportunities for Arm and Qualcomm
- Arm Revenue Growth: In Q1 2026, Arm's revenue grew 20% year-over-year to $1.5 billion, driven by its licensing and royalty-based business model, resulting in a healthy 21% net income margin, indicating strong market demand and profitability.
- Qualcomm Revenue Fluctuations: Despite Qualcomm's net income margin nearing 70% in Q1, its revenue fell 3.5% year-over-year, reflecting challenges in its strategic shift from the handset market to automotive, IoT, and data center segments, necessitating close monitoring of future growth potential.
- Market Competition Analysis: Over the past three years, Arm's stock has surged nearly 600%, compared to Qualcomm's approximately 123% return, highlighting Arm's increasing competitiveness in the semiconductor industry, particularly in automotive and AI applications.
- Future Outlook: As Qualcomm adjusts its product lineup to seize opportunities in data centers and AI-driven consumer devices, it will be crucial to observe whether it can accelerate revenue growth in the coming years while Arm continues to expand its market share.
See More
Stocks Hit Record Highs Again, Driven by Tech Gains
- Market Performance: Last week, the S&P 500 and Nasdaq Composite rose over 1% and 2%, respectively, marking the S&P 500's ninth consecutive week of gains and the Nasdaq's eighth out of the last nine weeks, reflecting strong investor confidence in the market.
- Tech Stock Surge: Snowflake's quarterly earnings exceeded expectations and included a $6 billion AI compute deal with Amazon, leading to a more than 36% single-day stock price increase, which reignited enthusiasm across the tech sector and boosted stocks like Dell and Broadcom significantly.
- Cybersecurity Stock Volatility: Zscaler's disappointing earnings report resulted in its worst single-day performance, negatively impacting peers CrowdStrike and Palo Alto Networks; however, Okta's strong earnings report led to a 30% stock price jump, indicating ongoing demand in the cybersecurity sector.
- Middle East Situation's Market Impact: Despite mixed signals from the Middle East, rumors of peace progress between Iran and the U.S. spurred market gains, although the White House dismissed the reports, investor optimism still supported the stock market's upward trajectory.
See More
Microsoft to Unveil New AI Models at Build Conference
- New AI Model Launch: Microsoft is set to unveil a suite of homegrown AI models at its annual Build developer conference in San Francisco, which is expected to enhance its competitive edge in the AI sector, particularly in collaboration with Nvidia.
- Super App Development: The company is developing a super app that consolidates its Copilot AI tools, aiming to integrate GitHub Copilot, Copilot chat, and new workflow capabilities into a single platform, with a launch anticipated by the end of summer to enhance user experience and product stickiness.
- Stock Price Surge: Following the acquisition of a multi-billion-dollar defense contract, Microsoft's stock rose approximately 5.5% on Friday, achieving a 10.4% gain in May, reflecting market confidence in its future growth potential.
- Hardware Collaboration Outlook: The teaser for a “new era of PC” from Microsoft and Nvidia suggests the upcoming launch of Nvidia's “N1X” processor, which could challenge current market leaders in personal computing and reshape consumer perceptions of PCs.
See More
US Stock Indices Reach All-Time Highs Amid Positive Economic Signals
- Strong Market Performance: The S&P 500 rose by 0.22%, the Dow Jones Industrial Average increased by 0.72%, and the Nasdaq 100 climbed by 0.36%, with all three indices reaching new all-time highs, reflecting market confidence in economic recovery.
- Tech Stocks Lead Gains: Dell Technologies surged 32% after reporting Q1 total revenue of $43.84 billion, significantly exceeding the consensus estimate of $35.52 billion, and raised its 2027 revenue forecast to between $165 billion and $169 billion, indicating strong market demand and growth potential.
- Positive Economic Data: The May Chicago PMI rose by 13.5 to 62.7, far surpassing expectations of 50.3, marking the fastest expansion pace in 4.25 years, which further bolstered market confidence in stocks.
- Oil Price Decline Benefits Stocks: Crude oil prices fell over 1% to a five-week low due to a preliminary agreement between the US and Iran, easing inflation concerns and supporting the upward trend in the stock market.
See More
Dell Technologies Poised to Dominate Computer Market
- Dell's Impressive Earnings: Dell Technologies' latest earnings report is described as a 'blowout,' indicating strong market demand that could signify its dominance in the computer space, further fueling enthusiasm around data center trades.
- Nvidia's Challenges: While tech stocks have performed well, Nvidia has emerged as a notable laggard, with expectations that CEO Jensen Huang's upcoming keynote at Computex in Taiwan could introduce new products and potentially shift this trend.
- Market Dynamics to Watch: Next week, Merck will review its cancer portfolio, while Palo Alto Networks and Ulta are set to report earnings; Cramer anticipates that these companies may be influenced by AI-driven market changes, particularly in cybersecurity.
- Employment Data Impact: The Labor Department's jobs report on Friday will shape expectations for interest rate cuts, with Cramer noting that the data needs to be weak enough to justify a rate cut from the Federal Reserve, which could influence investor decisions.
See More
Comparative Growth Analysis of Qualcomm and Arm
- Revenue Growth Comparison: Arm achieved a 20% year-over-year growth in Q1 2026, while Qualcomm's revenue fell by 3.5%, indicating Arm's stronger growth potential in the market, which may attract investor interest in its future performance.
- Profitability Analysis: Arm's net income margin stands at 21%, while Qualcomm boasts nearly 70%, indicating Qualcomm's strong profitability; however, its slowing revenue growth may impact long-term investment appeal.
- Market Transformation Strategy: Qualcomm is shifting focus from the handset market to sectors like automotive, IoT, and data centers, and if its AI strategy is successfully implemented, it could accelerate revenue growth and narrow the gap with Arm.
- Investor Focus: Despite Arm's stock rising nearly 600% over the past three years, Qualcomm's growth is also noteworthy, especially during its transformation, prompting investors to closely monitor its performance in AI and consumer devices.
See More
AI Drives Growth Opportunities for Arm and Qualcomm
- Arm Revenue Growth: In Q1 2026, Arm's revenue grew 20% year-over-year to $1.5 billion, driven by its licensing and royalty-based business model, resulting in a healthy 21% net income margin, indicating strong market demand and profitability.
- Qualcomm Revenue Fluctuations: Despite Qualcomm's net income margin nearing 70% in Q1, its revenue fell 3.5% year-over-year, reflecting challenges in its strategic shift from the handset market to automotive, IoT, and data center segments, necessitating close monitoring of future growth potential.
- Market Competition Analysis: Over the past three years, Arm's stock has surged nearly 600%, compared to Qualcomm's approximately 123% return, highlighting Arm's increasing competitiveness in the semiconductor industry, particularly in automotive and AI applications.
- Future Outlook: As Qualcomm adjusts its product lineup to seize opportunities in data centers and AI-driven consumer devices, it will be crucial to observe whether it can accelerate revenue growth in the coming years while Arm continues to expand its market share.
See More
Stocks Hit Record Highs Again, Driven by Tech Gains
- Market Performance: Last week, the S&P 500 and Nasdaq Composite rose over 1% and 2%, respectively, marking the S&P 500's ninth consecutive week of gains and the Nasdaq's eighth out of the last nine weeks, reflecting strong investor confidence in the market.
- Tech Stock Surge: Snowflake's quarterly earnings exceeded expectations and included a $6 billion AI compute deal with Amazon, leading to a more than 36% single-day stock price increase, which reignited enthusiasm across the tech sector and boosted stocks like Dell and Broadcom significantly.
- Cybersecurity Stock Volatility: Zscaler's disappointing earnings report resulted in its worst single-day performance, negatively impacting peers CrowdStrike and Palo Alto Networks; however, Okta's strong earnings report led to a 30% stock price jump, indicating ongoing demand in the cybersecurity sector.
- Middle East Situation's Market Impact: Despite mixed signals from the Middle East, rumors of peace progress between Iran and the U.S. spurred market gains, although the White House dismissed the reports, investor optimism still supported the stock market's upward trajectory.
See More
Microsoft to Unveil New AI Models at Build Conference
- New AI Model Launch: Microsoft is set to unveil a suite of homegrown AI models at its annual Build developer conference in San Francisco, which is expected to enhance its competitive edge in the AI sector, particularly in collaboration with Nvidia.
- Super App Development: The company is developing a super app that consolidates its Copilot AI tools, aiming to integrate GitHub Copilot, Copilot chat, and new workflow capabilities into a single platform, with a launch anticipated by the end of summer to enhance user experience and product stickiness.
- Stock Price Surge: Following the acquisition of a multi-billion-dollar defense contract, Microsoft's stock rose approximately 5.5% on Friday, achieving a 10.4% gain in May, reflecting market confidence in its future growth potential.
- Hardware Collaboration Outlook: The teaser for a “new era of PC” from Microsoft and Nvidia suggests the upcoming launch of Nvidia's “N1X” processor, which could challenge current market leaders in personal computing and reshape consumer perceptions of PCs.
See More
US Stock Indices Reach All-Time Highs Amid Positive Economic Signals
- Strong Market Performance: The S&P 500 rose by 0.22%, the Dow Jones Industrial Average increased by 0.72%, and the Nasdaq 100 climbed by 0.36%, with all three indices reaching new all-time highs, reflecting market confidence in economic recovery.
- Tech Stocks Lead Gains: Dell Technologies surged 32% after reporting Q1 total revenue of $43.84 billion, significantly exceeding the consensus estimate of $35.52 billion, and raised its 2027 revenue forecast to between $165 billion and $169 billion, indicating strong market demand and growth potential.
- Positive Economic Data: The May Chicago PMI rose by 13.5 to 62.7, far surpassing expectations of 50.3, marking the fastest expansion pace in 4.25 years, which further bolstered market confidence in stocks.
- Oil Price Decline Benefits Stocks: Crude oil prices fell over 1% to a five-week low due to a preliminary agreement between the US and Iran, easing inflation concerns and supporting the upward trend in the stock market.
See More
Dell Technologies Poised to Dominate Computer Market
- Dell's Impressive Earnings: Dell Technologies' latest earnings report is described as a 'blowout,' indicating strong market demand that could signify its dominance in the computer space, further fueling enthusiasm around data center trades.
- Nvidia's Challenges: While tech stocks have performed well, Nvidia has emerged as a notable laggard, with expectations that CEO Jensen Huang's upcoming keynote at Computex in Taiwan could introduce new products and potentially shift this trend.
- Market Dynamics to Watch: Next week, Merck will review its cancer portfolio, while Palo Alto Networks and Ulta are set to report earnings; Cramer anticipates that these companies may be influenced by AI-driven market changes, particularly in cybersecurity.
- Employment Data Impact: The Labor Department's jobs report on Friday will shape expectations for interest rate cuts, with Cramer noting that the data needs to be weak enough to justify a rate cut from the Federal Reserve, which could influence investor decisions.
See More
