AI Megatrend Positions Arm Holdings for Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy ARM?
Source: Fool
- Market Growth Potential: According to S&S Insider, the AI inference market is projected to grow from $87 billion in 2024 to $350 billion by 2032, indicating a significant market opportunity that Arm Holdings is well-positioned to capitalize on.
- Deepening Technical Collaboration: Anthropic's expanded partnership with Google and Broadcom to deploy 3.5 gigawatts of custom tensor processing units (TPUs) underscores the importance of Arm's architecture in AI inference, further solidifying its market position.
- Revenue Growth Expectations: Counterpoint Research estimates that by 2029, the share of Arm-based server CPUs in custom AI processor servers could rise from 25% last year to 90%, which will generate substantial licensing fees and royalties for Arm.
- Profitability Enhancement: Analysts expect Arm's earnings per share to increase by 21% to $2.14 in fiscal 2027, followed by a 35% jump in the next fiscal year, indicating a trend of accelerating profits that could drive stock price appreciation through the end of the decade.
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Analyst Views on ARM
Wall Street analysts forecast ARM stock price to rise
24 Analyst Rating
19 Buy
4 Hold
1 Sell
Strong Buy
Current: 159.340
Low
120.00
Averages
160.58
High
201.00
Current: 159.340
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.
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- Server CPU Opportunities: Arm-based server CPUs, such as Amazon's Graviton 5 and Apple's M5 MacBooks, could potentially offset smartphone-related revenue weakness, indicating that Arm's continued penetration in data center and networking is a durable secular trend that should not be overlooked.
- Long-Term Market Opportunities: Despite near-term downside risks to EPS, analysts believe the emergence of AGI CPUs represents a significant market opportunity for Arm, driving substantial earnings growth in the coming years.
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