Key Stats for ARM Stock
- Past week’s performance: 6.3%
- 52-week range: $100 to $453
- Valuation model target price: $436
- Implied upside: 82.2% over 2.7 years
Value your favorite stocks like ARM with 5 years of analysts’ forecasts using TIKR’s new Valuation Model (It’s free) >>>
ARM’s AGI CPU Demand Doubles Past Initial Target
Arm Holdings (ARM) reported a record first quarter of fiscal 2027, and the stock climbed as investors zeroed in on one number: demand for its new AI data center chip. Revenue came in at $1.29 billion, up 22% year over year and above the $1.26 billion analysts expected, with non-GAAP EPS of $0.45.
The standout story was Arm’s AGI CPU, a chip designed for AI data centers that the company introduced back in March. Cumulative customer demand for the chip has now topped $2 billion when measured across fiscal 2027 and fiscal 2028, more than double the $1 billion opportunity Arm originally outlined. That kind of demand surprise tends to move sentiment quickly, since it signals Arm’s compute platform is winning share in AI infrastructure faster than expected.
CEO Rene Haas sounded notably more confident about supply than he had 90 days earlier. He said Oracle has agreed to buy the chip and that Arm has added new customers in North America and China. Haas also noted improved visibility into manufacturing capacity, easing a concern that had weighed on the stock earlier this year.
Royalty revenue rose 22% to $715 million, and data center royalties in particular showed strong momentum, reinforcing that Arm’s shift from smartphones toward AI infrastructure is gaining real traction. If Arm’s AGI CPU demand continues to compound at this rate, the company’s growth story could look meaningfully different a year from now than it does today.
See how Arm’s AGI CPU demand compares with its Valuation Model on TIKR (It’s free) >>>
Does Arm’s AI Pivot Justify Its Price?
Under valuation model assumptions realized through 3/31/29, the stock is modeled using:
- Revenue Growth (CAGR): 30.0%
- Operating Margins: 45.9%
- Exit P/E Multiple: 81.7x
Based on these inputs, the model estimates a target price of $436, implying 82.2% total upside and a 25.3% annualized return over the next 2.7 years.
Arm’s valuation has long drawn skepticism, since the stock trades at over 100 times forward earnings even after this quarter’s pullback from 52-week highs. That said, the model’s projected annualized return of 25.3% sits well above the 15% threshold associated with undervalued names, suggesting the market may not have fully priced in the AGI CPU opportunity yet.
The bull case rests on Arm evolving from a pure licensing business into a broader AI infrastructure company. Data center royalties are growing faster than the company’s legacy smartphone royalty base, and that mix shift tends to support higher margins over time.
Compared with its own trading history, Arm’s current multiple isn’t far from where it traded a year ago, even though the underlying business now has a much larger AI infrastructure opportunity. That makes today’s price look more reasonable than it did before this quarter’s AGI CPU update.
The risk is execution. Supply constraints across wafers, substrates, and testing capacity remain real, so any delay in scaling the AGI CPU could slow the growth story investors are now pricing in.
Estimate a company’s fair value instantly (Free with TIKR) >>>
Arm vs. Qualcomm: Diverging AI Chip Paths
Arm’s clearest public comparison is Qualcomm (QCOM), though the two companies are moving in opposite directions right now. Qualcomm’s fiscal third-quarter revenue fell 4% year over year to $9.9 billion, pressured by declining handset sales, while Arm’s revenue grew 22% in the same period. Qualcomm currently trades around 15 times forward earnings, far below Arm’s roughly 100x NTM P/E, reflecting the market’s expectation that Arm’s AI-driven growth will far outpace Qualcomm’s smartphone-heavy business.
That gap isn’t accidental. Qualcomm is racing to diversify away from handsets, targeting $40 billion in non-handset revenue by fiscal 2029, but it’s starting from a much smaller data center base than Arm’s licensing model already touches through nearly every major chipmaker.
Arm’s moat comes from its architecture being embedded across the entire compute industry, from smartphones to cloud servers. That gives Arm exposure to AI infrastructure growth without needing to build and sell physical chips at Qualcomm’s scale, which supports Arm’s higher margins and premium valuation.
Qualcomm’s counterpunch is its data center push, targeting $15 billion in revenue by 2029, but that remains an early-stage bet compared to Arm’s already-diversified royalty base.
See how AI-driven licensing and royalty growth set the 2-year revenue and margin path >>>
What’s Driving ARM Stock Going Forward?
Arm’s biggest near-term catalyst is scaling AGI CPU production to meet the demand it has already booked. Management plans to give a more detailed capacity update at its fiscal third-quarter results, when visibility into fiscal 2028 demand should improve further.
Smartphone royalty trends remain a headwind to watch. While cloud AI demand is overperforming, the broader smartphone market stays soft, so Arm’s ability to keep offsetting that weakness with data center growth will matter for future quarters.
Supply chain execution is the third factor. Arm said its confidence in securing wafers, substrates, and testing capacity has improved, but any renewed bottleneck could delay the AGI CPU ramp and push out the upside the market is now pricing in.
Longer term, expanding customer adoption beyond current AGI CPU buyers, especially in China and among hyperscalers, could extend Arm’s growth runway well past its original fiscal 2028 target window.
Track how Arm’s next earnings update could shift its valuation model (Free with TIKR) >>>
Should You Invest in Arm Holdings?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up ARM, 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.
You can build a free watchlist to track ARM alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
Analyze ARM stock on TIKR Free→
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!
