Loop Capital raised its price target on Tuesday arm Holdings (NASDAQ: ) rose to $130 from $120 previously, while retaining a Buy rating on the stock. The company saw positive growth momentum from Arm Holdings following the company’s second-quarter earnings release on July 31.
Arm Holdings reported June quarter earnings in line with expectations and provided guidance for the September quarter, which was also in line with analysts’ forecasts. Arm Holdings has the potential to capture 50% of the Windows PC market share within the next five years, bolstering the company’s optimism.
Additionally, a strong smartphone market, an upgrade in Apple’s (NASDAQ: ) stock, and optimistic prospects for Nvidia’s (NASDAQ: ) next-generation AI GPU powered by Arm technology all contribute to the company’s positive outlook. position.
Loop Capital analysts believe that these factors may accelerate the industry’s transition to the Armv9 architecture. More companies are expected to develop AI-based products using Arm’s technology, which could increase adoption rates.
Arm Holdings can also benefit from its Compute Subsystem (CSS), which integrates Armv9 with other important components into a single die. This integration is seen as a key growth opportunity for Arm, providing its customers with faster time to market and lower development costs.
Additionally, both the Armv9 architecture and CSS are associated with significantly higher royalties, which could enhance Arm Holdings’ future revenue streams. The company’s strategic positioning and innovative technology are key factors in adjusting the price target and maintaining a Buy rating.
In other recent news, prominent semiconductor and software design company Arm Holdings reported record first-quarter fiscal 2025 results.
The company’s revenue grew 39% year over year, driven by strong licensing and royalty revenue, particularly in artificial intelligence applications and smartphones. Arm Holdings is expected to maintain a stable growth trajectory, with revenue guidance for the current fiscal year of $3.8 billion to $4.1 billion.
Significant partnerships with companies like Google (NASDAQ: ) and AWS, as well as the launch of Arm Ethos-U85 for Edge AI, have played a significant role in this growth. The company expects continued growth in licensing and royalty revenue driven by Armv9 adoption, share gains in the cloud and automotive segments, and growth in chips based on computing subsystems.
Although royalties are expected to decline slightly, Arm Holdings expects strong license growth in the fourth quarter due to a large number of transactions. The company also expects Arm-based PCs to reach 50% market share within five years. These are the latest developments in the company’s growth strategy, reinforcing its strong position in global markets.
Investment Professional Insights
InvestingPro’s latest indicator puts Arm Holdings (NASDAQ: ARM ) at a market capitalization of $115.75 billion, reflecting its significant position in the technology sector. The company’s P/E ratio of 285.15x trades at a premium, which may be justified by strong revenue growth of 31.37% in the trailing twelve months to Q1 2023. confidence.
InvestingPro Tips shows that Arm Holdings’ net profit is expected to grow this year, which is consistent with Loop Capital’s positive outlook on the company’s growth momentum. The stock’s recent performance shows a significant price increase over the past six months, with a total return of 51.34%, highlighting the market’s optimism about Arm’s future. Additionally, the company’s liquid assets exceed its short-term debt, providing financial stability and the ability to invest in further growth and innovation. For those looking to delve deeper into Arm Holdings’ potential, InvestingPro offers over 15 additional recommendations on its platform.
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