ℹ️ How are these calculated?
🎯 Investment Thesis
Arm is recasting its growth story around AI data centers — strong DC royalty revenue tied to AI workloads, partnering with hyperscalers on AI chip development. V9 architecture charges 2x the royalty rate. At 32% below ATH ($183), the post-earnings pullback creates a better entry. All 5 analysts maintain Buy/Overweight despite lowering PTs (JP Morgan $145, UBS $170, Wells Fargo $150). Edge AI and robotics broaden the TAM beyond smartphones.
⚠️ Key Risk
58x forward PE (trailing 167x) is extremely expensive even after the pullback. Every major analyst lowered their PT post-earnings on Feb 5 — JP Morgan cut from $180 to $145, TD Cowen from $190 to $165. Qualcomm lawsuit over custom cores could reduce royalties. China subsidiary issues unresolved. RISC-V gaining traction. Memory shortages could crimp AI chip growth.
By The Numbers
Event Impact
Designs the CPU architecture used in most AI inference chips. Royalty model benefits from every chip shipped.
No defense or energy exposure.
CPU architectures may be used in quantum control systems.
China licensing revenue significant. Arm China subsidiary is semi-independent and contentious.
At 58x PE, one of the most rate-sensitive stocks in our universe. UK-based with global licensing revenue. Higher rates crush high-multiple growth stocks hardest.
ARM designs power-efficient chips — energy efficiency matters as grid becomes constrained. Indirect beneficiary.
No significant fiscal exposure. UK-based company.
Price Targets
Upcoming Catalysts
Competitive Landscape
Open-source alternative, growing in China/IoT
Losing server share to Arm-based chips
Company Background
Founded 1990 as Acorn RISC Machine in Cambridge, UK. SoftBank bought it for $32B in 2016. IPO Sept 2023 at $51. Now the tax collector on the global chip industry.