Nvidia Sells Arm Stake but Maintains Partnership
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 18 2026
0mins
Source: Newsfilter
- Nvidia's Stake Sale: Nvidia's SEC filing on Tuesday revealed it has offloaded its stake in semiconductor firm Arm, yet this does not signify the end of their relationship, as Arm's shares rose 1.4% in premarket trading on Wednesday.
- Shareholding History: By the end of Q3, Nvidia held 1.1 million shares of Arm valued at $155.8 million, having maintained its stake since 2023 while gradually winding it down towards the end of 2024, indicating a strategic shift in its investment approach.
- Market Reaction: When Arm debuted on Nasdaq in 2023, Nvidia was part of a strategic investment group that collectively purchased $735 million in shares, and although its $40 billion acquisition bid failed due to regulatory hurdles, Nvidia retains a 20-year licensing agreement with Arm, continuing to support its technology.
- Financial Performance: Arm's recent earnings report showed a 26% year-on-year sales increase to $1.24 billion, exceeding analyst expectations, although shares fell in after-hours trading, with analysts noting high operating expenses suggest the company is preparing for long-term demand.
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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: 306.510
Low
120.00
Averages
160.58
High
201.00
Current: 306.510
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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See More
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- TSMC's Market Leadership: Taiwan Semiconductor Manufacturing holds about 72% of the global foundry market share, with an expected average annual earnings growth rate of 22% over the next three to five years, demonstrating its strong performance and market dominance amid the AI boom.
- Broadcom's Customization Advantage: Broadcom's AI accelerator chips (XPUs) are projected to exceed $100 billion in revenue next year, with an annual growth rate of 49%, providing strong momentum for its expansion in the data center market and attracting numerous clients, including Alphabet and OpenAI.
- ASML's Unique Position: ASML is the world's only supplier of extreme ultraviolet lithography machines, and despite facing geopolitical challenges, it is expected to achieve nearly 30% average annual earnings growth over the next three to five years, highlighting its critical role in the growing demand for AI investments.
See More
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- Strong Earnings Report: Nvidia's fiscal Q1 2027 results reveal its continued dominance in the AI chip market, with revenue and market share growth reflecting the company's robust performance in the rapidly evolving AI sector.
- Server CPU Market Opportunity: Nvidia plans to launch its standalone Vera server CPU, anticipating $20 billion in revenue by 2027, indicating its strategic focus on the server CPU market, which could pose a threat to AMD and Intel.
- Shifting Market Demand: As the industry shifts towards inference applications, demand for server CPUs has surged, with AMD and Intel reporting 57% and 22% increases in AI revenue respectively, while Nvidia aims to enter this market with new offerings to capture growth.
- Architectural Advantage: By utilizing Arm architecture for its server CPUs, Nvidia is positioned to capitalize on a projected 90% market share of Arm-based server CPUs in AI data centers by 2029, potentially disrupting Intel and AMD's market positions.
See More
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- Market Expansion: AI hyperscalers are projected to invest $725 billion in 2023, primarily in data centers and the chips and hardware required, driving growth across the semiconductor industry.
- TSMC's Dominance: Taiwan Semiconductor Manufacturing holds a 72% share of the global foundry market, with expected earnings growth of 22% annually over the next three to five years, showcasing its strong performance amid the AI boom.
- Broadcom's Customization Edge: Broadcom's AI accelerator chips (XPUs) offer tailored solutions for clients, with expectations of AI chip revenue surpassing $100 billion next year, propelling its earnings growth rate to 49% annually over the next three to five years.
- ASML's Unique Technology: ASML is the sole supplier of extreme ultraviolet lithography machines, and despite geopolitical challenges, it is expected to achieve nearly 30% annual earnings growth over the next three to five years, highlighting its significance in the growing demand for AI investments.
See More
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- Market Share Outlook: Nvidia anticipates achieving $20 billion in server CPU revenue this fiscal year, indicating a strong potential to capture a significant share of the $200 billion market, further solidifying its leadership in the AI chip sector.
- Product Strategy Shift: Nvidia plans to launch its next-generation Vera server CPU as a standalone product, expecting to contribute $20 billion in revenue by 2027, positioning itself prominently in the competitive server CPU market.
- Architectural Advantage: By utilizing Arm Holdings' architecture for its server CPUs, Nvidia is poised to benefit from a projected 90% market share of AI data center CPUs by 2029, showcasing its cost and computing efficiency advantages that could significantly impact Intel and AMD.
- Industry Collaboration: Nvidia's partnerships with major hyperscalers and system makers will facilitate the deployment of its Vera CPU, with CFO Colette Kress noting that nearly all major customers are collaborating with them, providing robust support for Nvidia's expansion in the server CPU market.
See More
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- Market Rally: The S&P 500 rose on Tuesday, primarily driven by technology stocks like Micron, Western Digital, and Seagate, reflecting investor optimism about a potential U.S.-Iran deal to end the conflict.
- Arm Stock Trim: Following a 46% gain last week, Jim Cramer decided to trim his position in Arm, emphasizing the importance of taking profits rather than chasing parabolic moves to maintain portfolio stability.
- Eli Lilly Acquisition Plans: Eli Lilly announced plans to acquire three companies for a total of $3.83 billion to expand its infectious disease vaccine business, indicating ongoing investment and strategic shifts in drug development, which led to a stock price increase of over 1%.
- Qnity Stock Potential: Qnity shares rose more than 3%, with Jim suggesting that if coverage expands beyond a limited number of analysts, the stock could reach $250, highlighting the growing demand for materials used in advanced computer chips.
See More
Jim Cramer Sells Shares of Arm Holdings
- Share Reduction: Jim Cramer's Charitable Trust will sell 55 shares of Arm Holdings shortly after the opening bell at approximately $314 each, reducing its holdings to 130 shares and decreasing its portfolio weight from 1.44% to 1%.
- Profit Locking: This trade will realize an approximately 80% gain, as Arm's stock surged 46% since the position was initiated on April 20, with half of that increase attributed to Nvidia's earnings call indicating Arm's Vera CPU could generate $20 billion in revenue this year.
- Risk Management: By trimming Arm's position back to 1%, Cramer aims to better manage the risks associated with the stock's exponential rise while also raising cash for other purchases or potentially buying back shares if the stock pulls back.
- Investment Discipline: Cramer emphasizes the importance of not chasing parabolic moves, opting instead to take profits at appropriate times, even if it means not selling at the absolute peak, as this aligns with his disciplined investment strategy.
See More
