Key Stats for ARM Holdings Stock
- Current Price: $234.81
- Target Price (Mid): ~$707
- Potential Total Return: ~201%
- Annualized IRR: ~32% / year
- Street Target (Mean): ~$170
- Max Drawdown: (41.47%) on February 3, 2026
- LTM Revenue: $4,671M | LTM Free Cash Flow: $824.75M
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What Happened?
Arm Holdings (ARM) closed at $234.81 on April 24, up 71% from its March 30 close of $136.96.
The catalyst was the Arm Everywhere event on March 24, where CEO Rene Haas announced that Arm, after 35 years of licensing chip blueprints, is now selling its own silicon. The product is the Arm AGI CPU, a data center processor with 136 high-performance cores built on TSMC’s 3-nanometer process and a 300-watt thermal design.
Committed customers include Meta as lead co-development partner, alongside OpenAI, Cloudflare, SAP, and F5. ARM surged roughly 16% the day after the event and continued climbing through April as analyst upgrades followed.
Citi called the launch “the most significant shift in the company’s history,” adding that projected AGI CPU revenue would drive “such a significant increase versus prior expectations that the market should not worry about the change in margin structure.”
Bulls see Arm targeting $25 billion in 2031 revenue, roughly six times the $4,007 million it reported in fiscal year 2025, with $15 billion of that from the AGI CPU alone. Bears point to a 121x NTM P/E and chip revenue that management says does not arrive in material form until 2028.
The first real test is May 6, when Arm reports Q4 fiscal 2026 results against its own guidance of $1.47 billion in revenue.
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Is ARM Holdings Undervalued Today?
The question is not whether Arm’s business is strong. It is whether the current price already reflects the best-case outcome.
At 97.43x NTM EV/EBITDA and 44.10x NTM EV/Revenue, ARM trades at a steep premium to peers. Intel (INTC) sits at 22x NTM EV/EBITDA and NXP Semiconductors (NXPI) at 13.5x, while the broader peer median NTM EV/Revenue on TIKR’s Competitors page is just 4.96x. The 36-analyst Street mean target of around $170 sits well below the current price of $234.81, which means the market is running ahead of where consensus models currently sit.
The demand story behind the 2031 roadmap is structural. Haas explained that traditional AI workloads need roughly 30 million CPU cores per gigawatt of data center capacity. Agentic AI, where autonomous software agents execute complex tasks continuously without human input, changes that math: because agents run around the clock and generate requests far faster than people, Haas said, token demand per user rises “15x, if not greater.”
His estimate puts the new CPU requirement at roughly 120 million cores per gigawatt, a fourfold increase. GPUs generate the tokens, but CPUs handle the orchestration, and no GPU can fix a CPU bottleneck.
Meta’s infrastructure head Santosh Janardhan, overseeing systems serving over 3.5 billion daily users, explained on stage why Meta co-developed the chip. After surveying the market, the team found no CPU that could deliver both the performance and power efficiency it needed. “If we met the performance, we couldn’t get the power. If we got the power, we couldn’t get the performance,” he said.
Haas added that the AGI CPU delivers twice the performance per rack versus x86 at the same power, which he said could translate to up to $10 billion in capital expenditure savings per gigawatt.
One near-term detail from the transcript worth noting: Arm’s CSS (compute subsystems, pre-integrated chip designs that cut a customer’s time to market by up to 18 months) already represents nearly 20% of royalties and is growing, before the AGI CPU has contributed a dollar.
The free cash flow picture reflects the investment phase: LTM FCF stands at $824.75 million, with capital expenditure rising from $92 million in fiscal 2024 to $219 million in fiscal 2025. TIKR consensus estimates project FY2026 revenue at around $5,920 million and FY2027 at around $7,579 million, with the AGI CPU ramp still ahead.
The risks are concrete. Smartphone royalties remain under pressure. The AGI CPU generates no material revenue until 2028 by management’s own guidance. At 121x NTM earnings, there is no margin for delays in execution.
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TIKR Advanced Model Analysis
- Current Price: $234.81
- Target Price (Mid): ~$707
- Potential Total Return: ~201%
- Annualized IRR: ~32% / year
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The TIKR mid case assumes around 31% revenue CAGR through fiscal year 2030, driven by royalty mix shift toward higher-value v9 architecture chips and AGI CPU revenue beginning to ramp from 2028. Arm’s LTM gross margin of around 97.5% means incremental revenue flows heavily to the bottom line, supporting the around 47% net income margin assumption in the mid case. Even the low case projects around 27% annualized IRR, suggesting meaningful upside even if the ramp takes longer than expected.
The primary risk is execution timing. A 121x NTM earnings multiple punishes any delay. A secondary risk is ecosystem friction: Arm’s move into silicon has complicated its historically neutral relationships with chip designers who now compete with their own IP licensor.
Conclusion
Watch two things at the May 6 earnings call: whether Q4 revenue hits management’s $1.47 billion guidance, and whether FY2027 guidance clears the current consensus of around $7,579 million with concrete AGI CPU production timelines for the second half of 2026. Arm built a 35-year economic moat by never competing with its customers. It is now competing with them because agentic AI makes power-efficient CPU design the most valuable capability in the data center, and no x86 incumbent has that DNA.
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Should You Invest in ARM Holdings?
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Pull up ARM Holdings, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
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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!
