Nvidia Sells ARM Stake, Market Reacts Positively
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 18 2026
0mins
Should l Buy ARM?
Source: CNBC
- Nvidia Reduces ARM Stake: Nvidia gradually reduced its stake in ARM by the end of 2024, holding 1.1 million shares valued at $155.8 million; despite the sell-off, Nvidia's 20-year licensing agreement with ARM remains intact, indicating a long-term partnership.
- ARM Earnings Beat Expectations: ARM reported a 26% year-on-year increase in sales to $1.24 billion in its latest earnings report, surpassing analyst expectations and demonstrating strong momentum in AI projects, although its stock fell in after-hours trading, reflecting cautious market sentiment regarding future guidance.
- Positive Market Reaction: Following its Nasdaq debut, ARM's market cap is approximately $135 billion, and Nvidia's stake reduction did not dampen market confidence, as ARM shares rose 1.4% in premarket trading, indicating investor recognition of its long-term growth potential.
- Morgan Stanley Optimistic: Morgan Stanley has an “overweight” rating on ARM with a price target of $135, representing a premium of over 6% from Tuesday's closing price, reflecting a positive outlook on ARM's future performance, particularly in ongoing investments in AI.
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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: 213.310
Low
120.00
Averages
160.58
High
201.00
Current: 213.310
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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- Surging Demand: Despite management's concerns about supply chain constraints limiting the fulfillment of strong demand for its new AGI CPU, the company anticipates revenue exceeding $2 billion over the next two fiscal years, significantly above the initial $1 billion forecast, reflecting high market recognition of its products.
- Optimistic Market Outlook: Arm forecasts annual revenue of $15 billion from CPUs by 2031, with total revenue reaching $25 billion, as CEO predicts market share will surpass competitors Intel and AMD, showcasing its competitive edge in energy efficiency.
- Capital Expenditure Drivers: Arm's customers, including hyperscalers, are projected to spend $700 billion in capital expenditures over the next five years, which will further drive Arm's market share growth and revenue increase, although revenue from the AGI CPU won't materialize until Q4 2027.
See More
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- Supply Chain Challenges: Arm faces significant supply chain bottlenecks, particularly wafer capacity at TSMC, which is essentially sold out, and a shortage of memory chips that could hinder collaborations with key partners like Meta and OpenAI.
- Long-Term Revenue Outlook: Arm forecasts annual revenue from its CPU to reach $15 billion by 2031, and if it captures a majority of the $100 billion total addressable market, actual revenue could significantly exceed this target, highlighting its market potential.
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See More
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- Security and Governance Challenges: Despite the immense potential of AI agents, issues surrounding security and governance remain unresolved, highlighted by a viral incident where a Meta employee reported OpenClaw deleting numerous emails, raising trust concerns and indicating that enterprises are not yet fully prepared to manage AI agent risks effectively, which could hinder widespread adoption.
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See More
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See More
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- Boeing Stock Rise: Boeing's shares rose as CEO Kelly Ortberg is set to accompany President Trump on his trip to China, with the market anticipating a major order of up to 500 planes, although skepticism remains regarding the order's realization.
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See More
