Key Stats for Arm Holdings Stock
- Current Price: $307.49
- Target Price (Mid): ~$1,375
- Street Target: ~$289
- Potential Total Return: ~347%
- Annualized IRR: ~40% / year
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What Happened?
Arm Holdings (ARM) closed at $307.49 on October 2, 2026, up 5.18% during a broad rally in chip and tech stocks. That left shares up 181% year to date and above the Street’s mean target of around $289. They remain below the $322.90 close of September 21. That day’s chip rally, which coverage linked to Meta Platforms’ (META) Muse AI agent, lifted Meta 11.4% and Arm 17.2%, though Meta has not said whose processors run Muse.
Behind the run sits a quieter shift. Royalties brought in $715 million of Arm’s $1.29 billion in revenue for the June quarter, results Arm reported on July 29 and posted in its investor relations materials. The new AGI CPU, however, earns a fraction of royalty margins.
A Doubled 2031 Forecast Meets High-30s Gross Margins
As of October 4, consensus revenue for fiscal 2031, which ends in March 2031, stood around $26 billion, up from around $12 billion at the end of 2025. The analysts covering that year rose from 3 to 11 over the same span, so the two averages are not like-for-like. On the July 29 call, an analyst cited $15 billion of AGI CPU revenue expected for fiscal 2031. CEO Rene Haas said Arm is “not changing the numbers at all,” adding that its March market-size view “may have been conservative.”
Those chips earn far less per dollar of sales. Jason Child, Arm’s Chief Financial Officer, said first-generation AGI CPU gross margin should be “somewhere in the high 30% range, maybe low 40s percent,” with 50% expected over “the next couple of years.” Street estimates show Arm’s gross margin falling from 98.2% in fiscal 2026 to around 70% in fiscal 2031. Normalized net margin is still forecast to rise from 38.4% to around 44%. In other words, the Street is counting on operating leverage to absorb a roughly 28-point gross margin drop.
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Nvidia’s Agent Watchdog Runs on Arm Server Cores
The royalty side shows up in less obvious places. On September 28, Nvidia (NVDA) launched its Open Agent Safety Platform, with Arm among its backers. Its Sentry watchdog, offered as a reference design, runs on BlueField-4 data processing units.
BlueField-4, unveiled in 2025, swaps BlueField-3’s up to 16 Cortex-A78 cores, a design typically marketed for smartphones, for a 64-core Grace CPU built on Arm’s server-grade Neoverse V2. The platform’s OpenShell software can also run on Intel (INTC) x86 systems, and Arm does not disclose what it earns per DPU.
Child pointed to that pocket on the call: “This is being driven by the continued ramp of Arm-based server chips at all the major hyperscalers alongside increasing deployments of data center networking chips, particularly DPUs and SmartNICs where Arm technology is deployed in nearly all leading products.” Neoverse shipments passed 1.5 billion cores, with the latest 500 million arriving in 9 months versus 6 years for the first 1 billion.
Higher memory prices pushed Child’s fiscal 2027 royalty growth estimate to “closer to the high teens” from about 20%, and Q2 royalty growth is guided to 13%. He expects royalties back “in that 20% range next year and beyond.”
At about 129 times NTM normalized earnings, versus about 71 times for Intel and a peer median near 65 times, the stock needs both businesses working. Of 43 ratings, 21 are Buy, 8 Outperform, 12 Hold, and 2 Sell.
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TIKR Advanced Model Analysis
- Current Price: $307.49
- Target Price (Mid): ~$1,375
- Potential Total Return: ~347%
- Annualized IRR: ~40% / year
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The mid case is TIKR’s central scenario, so it gives the fairest read on whether a buyer at $307.49 still gets paid. It targets around $1,375 by March 31, 2031, about 40% a year over 4.5 years. For context only, and not as the model’s inputs, Street consensus has revenue compounding around 39% a year, from $4.92 billion in fiscal 2026 to around $26 billion in fiscal 2031.
The main risk is supply, which Child called “pretty tight” through calendar 2027. Upside would come from a CPU market nearer the “up to $200 billion” some peers have floated, double Arm’s own roughly $100 billion view. Downside would come from royalties stalling while silicon dilutes margins faster than scale offsets it.
Conclusion
Arm’s investor site lists November 4, 2026, as a tentative date for fiscal Q2 results. Royalty growth at or above the 13% guide would show the high-margin engine holding while the AGI CPU ramps. The larger checkpoint is fiscal 2028, when Child expects silicon to reach 10% of revenue and become its own reporting line. At that point, the lower-margin business will be visible in plain numbers.
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So what is Arm Holdings stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
